After an eight-years wait to win the contract, NRI businessman C Metguds 500-mw naphtha-based power project is facing yet another hiccup; this time over liquid fuel quota.
Although NRI Capital Corporation, the company spearheaded by Metgud, received clearance to set up the Rs 2,000 crore project in Bidadi district, the Centre has reportedly cancelled liquid fuel allocation for Karnatakas power projects, an overture that was extended by former Prime Minister H D Deve Gowda.
A company official said: Just when we thought we had the project in the bag, the fuel allocation has become an issue. The Centre has still to inform us about our share in the allocation.
A senior state energy department official said yesterday that Karnataka had yet to receive formal intimation about the cancellation from the Centre. We have not received any official communique on liquid fuel allocation so far, he told Business Standard.
It is learnt that the states recommendation list for naphtha allocation has reserved a meagre quota (just enough to run 100 mw) for Metguds venture. The state has recommended naphtha allocation for just 100 mw for this project. The rest will be fueled by coal. The state government has been in a quandary over meeting the naphtha requirements for its 25-odd power projects cleared since 1995 to generate a whopping 6,000 mw, said the energy department official.
NRI Capital recently won Foreign Investment Promotion Board approval to start the first phase of its project by December. In fact, the Pulakeshi Power Co set up for this purpose, was registered with the Registrar of Compa- nies, Karnataka, on January 1996, with an initial capital of Rs 1 crore.
The company is currently in the process of negotiating the power purchase agreement (PPA) with the Karnataka Electricity Board (KEB).
NRI Capital plans to source funds by tapping the capital market and from financial institutions. Fifty-one per cent of equity will be pumped in by the NRIs, a Pulakeshi Power Company source said.
The power plant has been jinxed right from the start. NRI Capital had submitted its project proposal in the middle of 1980s. And in 1988, it was given an in-principle clearance by the state government to erect a 500 mw plant at Mangalore.
The clearance for the Pulakeshi Power plant was, however, reportedly withdrawn when the National Thermal Power Corporation (NTPC) presented a proposal to build a 2,000 mw plant at the same site with Russian assistance. But the project finally went to US-based Cogentrix after Russia withdrew from the project.
In 1992, when the state government opened up the power sector for private participation, Metgud forwarded his proposal again. Finally, Pulakeshi Powers proposal was cleared along with 11 other power projects through the MOU route in 1995.
