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Private power projects moving at snail's pace

Abhijit S. Basu

MUMBAI, June 18

ONLY five private power projects, aggregating a total capacity of around 3,000 MW, are likely to achieve financial close in the current fiscal, according to rough estimates by financial institutions.

``This is likely to lead to a serious power shortage in the country in the near future. With most State electricity boards (SEBs) being cash-strapped and in no position to fund new projects, the Government was banking on the private producers to meet the shortfall in electricity generation,'' a top FI source said.

As on March 31, 2000, the installed capacity of power in the country was 97,836.88 MW and the peak deficit was 12.4 per cent. As per the FI estimates, the private projects which could attain financial close in this fiscal include the 578-MW A.V. Birla gr oup-sponsored Bina power project in Madhya Pradesh, the RPG group-promoted 500-MW Balagarh project in West Bengal and the Videocon-sponsored 1,050-MW project in Tamil Nadu.

FI sources said the poor financial health of most SEBs and the absence of a proper security structure (escrow cover) were the main reasons for the slow progress of private power projects. According to sources, the Power Ministry has further added to the confusion by asking FIs to scrap escrow cover and instead, link power funding to reforms undertaken by SEBs. ``This is likely to force the institutions to go slow on financing power projects as they would like to ensure a proper security structure prior to disbursements,'' a source said.

Latest figures reveal that the Central Electricity Authority (CEA) has accorded techno-economic clearance to 57 schemes (private) for setting up of power projects aggregating a capacity of 29,362.30 MW.

However, so far, only eight independent power producers (IPPs) have able to commission their projects. These include the first phase of the 2,015-MW Enron power project in Maharashtra, the 655-MW Paguthan project of PowerGen in Gujarat and the 330-MW PPN Power in Tamil Nadu.