Ministry, Fis To Meet On Escrow

The power ministry is expected to hold a meeting with financial institutions (FIs) today to discuss the alternatives to escrow cover for independent power producers

The power ministry and the Fis are expected to take up the report submitted last week by the FIs, whereby they agreed to finance private power projects on the basis of power reforms in the states.

The Union power minister P R Kumaramangalam and the FIs are also expected to meet the finance minister Yashwant Sinha prior to the meeting. Among the FIs expected to attend the meeting are Infrastructure Development Finance Corporation, ICICI as well as the Industrial Development Bank of India.

 

The meeting is expected to chalk out the strategy to be adopted by FIs and states governments on the reform model to be followed based on which the Fis would be willing to fund power projects.

Based on the reform agenda and the state in consideration, sources had earlier indicated that FIs would decide on the capacity of the projects that could be financed.

The FIs want state governments to undertake a full commitment on the reform model and chalk out milestones that will be acceptable to financial institutions.

The funds will be provided in a phased manner similar to the way World Bank loans are given to states. This implies that the financial institutions can withdraw financing if the state does not stick to the milestones agreed upon.

The meeting will also work towards the timeframe to be adopted for this review.

Immediately after the meeting, the power ministry is to hold another meeting with the Madhya Pradesh government. A number of power projects have been stuck in the state on the escrow issue.