Talks With Cogentrix To Resume Today

The IMC had questioned a number of important provisions in the power purchase agreement (PPA) signed between the Karnataka Electricity Board and the Mangalore Power Company. A high-power Cogentrix team is already here to participate in the negotiations. The most contentious issue of a cap on deemed power generation is expected to be solved during the negotiations.The two sides are learnt to have already narrowed down their differences over the objectionable provisions, including those relating to withholding taxes, political risks, operation and maintenance expenses and income tax on bonus generation.

During the IMC meeting on June 25 and 26, there was a general agreement on several provisions in the PPA. However, official sources said the committee could not reach a consensus on some major areas. The Mangalore Power Company (MPC) and the Karnataka Electricity Board (KEB) had signed the PPA on September 30, 1994. On the basis of the comments of the finance ministry and the Central Electricity Authority (CEA) on the PPA, both MPC and KEB framed a joint response. This was discussed with the finance ministry as well as the CEA.On November 10, 1995, 77 items were referred to the finance ministry for its concurrence and seven items were sent to CEA for examination during its techno-economic appraisal. The state government and KEB were also asked to expedite finalisation of some pending PPA issues.

 

Since the finance ministry failed to convey its concurrence on the 77 items, KEB and MPC signed a revised PPA on January 18, 1996, incorporating finance ministry