The clearance was accorded on Wednesday after Cogentrix refused to enter into further renegotiations on some of the contentious issues concerning its cost structure and gave the government take-it-or-leave-it option.
The project will now be placed before the Union cabinet for extending Central counter-guarantee.
Officials say the counter-guarantee may not come before the government's self-imposed deadline of September 30.
Officials point out the power ministry would not have posed the project to the Union Cabinet for extending the counter-guarantee and was itself empowered to do so, but for the fact that the Karnataka State Electricity Board had not met the mandatory three per cent rate of return needed for such guarantee. The Union cabinet's approval in such a case becomes necessary, officials say.
Cogentrix is learnt to have taken a tough stand on the issue of heat rate. Heat rate is the quantity of heat required to generate per unit of electricity. High heat rate implies that more fuel would be required to generate the heat required for power generation. This, in turn, means that the cost of fuel for generating per unit of power will also be high.
The high fuel cost will subsequently be reflected in the power tariff that the power developer will charge the state electricity board.
During last week's negotiations between the power ministry, finance ministry, the Central Electricity Authority (CEA) and Cogentrix, CEA and the finance ministry insisted that the heat rate for the type of plant being put up by Cogentrix should not exceed 2,300 kilo calories per kilo watt hour (kCal/kWh). The latter, on the other hand, insisted on a heat rate of 2,500 kCal/kWh.
In its techno-economic clearance, the CEA says the heat rate should not exceed 2,449 kCal/ kWh. This implies that both the parties have shifted their stands in a manner that would benefit them in the final tariff calculations.
Cogentrix apparently made it clear during the negotiations that it was not willing for opening up negotiations on all the issues that had been finally settled earlier. It said the government should consider the proposal in its entirety and not in parts. Unconfirmed reports, however, said the high powered board has cleared the project with a heat rate of 2,449 kCal/kWh, as originally proposed by CEA.
