Mp Govt To Meet Fis And Ipps On Escrow Issue

The Madhya Pradesh government has summoned a meeting of financial institutions and bidders for power projects in the state on September 14 to discuss the much-speculated escrow account issue. The meeting will be held at Jabalpur.

The fate of independent power projects (IPPs) totalling 8,000 MW depends upon the outcome of the meeting.

Power industry sources said the meeting will discuss the issue of giving escrow accounts to the largest number of IPPs. Besides, it will also focus on how the state electricity board can utilise the idea of auctioning the escrow account to get the lowest tariff.

"I am sure some of the IPPs will take off in the state," said H Dhaul, director general of the Independent Power Producers Association of India.

A piquant situation has arisen in Madhya Pradesh with the state government deciding to auction the escrow account cover to the IPPs which quote the lowest tariff.

The state government had signed MoUs totalling about 8,000 MW with various IPPs. Initially, it was planning to provide escrow account cover to power projects totalling 3,000 MW. Financial Institutions who were planning to fund these projects, however, insisted that the escrow account cover be capped at 2,561 MW. In the absence of this ceiling they were unwilling to lend to any of the projects.

The Madhya Pradesh government then decided that power projects which quoted the lowest tariff would get the escrow cover. This has led to prospective power producers in the state feeling shortchanged as most of them will not get the escrow cover.

"The government should have a consistent policy towards IPPs. In the current scenario, there is a feeling of uncertainty among them as conditions are changed in the last minute," Dhaul said.

Two of the major projects being planned in the state include, the 500 MW Bina project promoted by the A V Birla group and the 500 MW Korba project promoted by the RPG group.

Another leading project is the 500 MW Raigarh project promoted by Jindal Strips. Some of the other projects which are being considered are the 330 MW Essar promoted project, the 500 MW Larsen & Toubro project for BHEL, the 330 MW Guna power project by STI Power, the 500 MW Penchpower project, the 213 MW Madhya Bharat Energy Corporation project at Khandwa and the 166 Narsingpur project promoted by GBL Power.