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The Andhra Pradesh government is set to fix stringent conditions on promoters of power projects for the limited escrow cover allocation.

According to the conditions, promoters of independent power projects will be required to bring 60 per cent of their equity and 10 per cent of debt funds upfront to procure escrow cover from the state.

Apart from this, the state government has already indicated that escrow cover to the power ventures will be given 30 days before the project's commercial date of operation.

Sources said these stringent conditions were primarily meant to gauge the commitment of the promoter and lending agencies in developing the power projects. These conditions were also made to prevent the state from facing the same situation as Madhya Pradesh, sources said.

Even though the state does not have as many independent power producers as compared to Madhya Pradesh, several promoters in the state have claimed that they are close to tying up funds for their power ventures.

The crises resolution group under the Union power ministry has already indicated that the state government's escrow capacity is 2,500 mw. This implies that the state can extend escrow guarantees to power projects totalling a capacity of 2,500 mw.

Some of the crucial projects include the Hinduja-National Power promoted 1,040 mw Vishakaptnam project, the BPL-promoted 500 mw Ramagundam power project and the Lanco-Ispat promoted 542 mw Vemagiri power project.

Apart from these private ventures, the National Thermal Power Corporation (NTPC) is also setting up a 1,000 mw power project at Simhadiri which will be dedicated to the state. NTPC officials said they will also insist on an escrow cover from the state government to promote the power project.

If the NTPC power project is included, the state may find itself in a situation where projects in the state will total more than 2,500 mw, sources said. "It is here that the condition of getting funds upfront will indicate the progress of the project," a source said.

Andhra Pradesh already has two functioning independent power producers_Spectrum and Godavari_and the Kondapally power project will add another 350 mw. All these projects have already been provided escrow cover by the state.

Under the escrow provisions, the state will set aside a part of its revenue from its circles for the independent power producer, which will then be assigned to the lenders of the project. The escrow will depend on the comfort level of the lenders to the project.