The Union government may take a fresh look at the counter-guarantee to be extended to the 1070-mw Vishakapatnam power project being promoted by the Hinduja-National Power combine in Andhra Pradesh. This follows strong objections raised by the promoters on the new terms mooted in the counter-guarantee.
The government had last month announced that counter-guarantees, with some changes, would soon be issued to the fast track power projects. However, this is yet to be done.
In a strongly worded letter to Prime Minister AB Vajpayee and finance minister Yashwant Sinha, the promoters have asserted that unless some of the key conditions are amended, it would be impossible to execute the project. Sources said that the PM has directed the finance ministry to hear the promoters concerns.
The promoters have already briefed principal secretary Brajesh Mishra on the issues involved.
The main objection relates to the changes that have been brought about in the counter-guarantee on the tariff notification, the cover only for foreign debt upon termination of the contract, the review of the EPC costs and the delays in the coal supply and transportation contract.
The government had last month said that it would cover only the foreign debt portion of the project and that too only if the contract between the concerned state government and the promoter was terminated. Also, on tariff notification, the government said the performance of the stations would be gauged on `actuals' or the norms, which ever was lower. This amendment also defines the income streams available for which tax can be recovered from tariff charged to the electricity board.
The Hinduja's, in their letter to the PM, have outlined that a lender cannot fund the project based on this guarantee. They said that the review of the EPC costs by state governments would only delay the project as the entire process of CEA clearances and PPA negotiations would have to be done afresh. The other issue, which is specific to the Hinduja's, pertains to the delay in finalising the coal supply and transport agreement with Coal India. Sources said that this was because there were some inter-ministerial problems between Coal India and the Railways.
