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TNEB may revoke escrow cover for Videocon project

N. Ramakrishnan

CHENNAI, Aug. 10

THE prospects of the 1,050 MW coal-based Videocon power project in north Chennai appear bleak with the Tamil Nadu Electricity Board (TNEB) considering revocation of the escrow cover given to it.

The TNEB feels that the project has not made much headway and is yet to achieve financial closure even though the time given for this has expired.

The TNEB had commissioned Crisil to conduct a study of the tariffs of the independent power projects and rank them according to the tariffs. Crisil studied the tariffs of the projects, both MoU-based and those awarded on an international competitive bid basis, and recently submitted its report to the TNEB.

The report covered the six MoU-based projects, including Videocon, which have got escrow cover, besides the LNG terminal-cum-power project, the Jayamkondam lignite-based project of the Reliance consortium, and the short-gestation multi-fuel projects.

A meeting of the members of the TNEB on Tuesday discussed this Crisil report. However, no official word was available.

It is also felt that the levelised tariff of the Videocon project is much higher than some of the other projects waiting to take off. The issue, therefore, is whether the TNEB should pay a higher tariff when projects with lower tariff are available.

Although a couple of other independent power projects -- like the 330 MW combined cycle project at Pillaiperumalnallur and the 250 MW lignite-based project at Neyveli -- quote a tariff higher than Videocon's, the argument is that these projects have achi eved financial closure and construction activity is on in full-swing, which is not the case with the Videocon project.

It may be recalled that Videocon Power Ltd., in which the Videocon group has a 51 per cent stake and National Power of UK the balance, signed the tripartite escrow agreement in December last. The escrow agreement specified that Videocon would have to ach ieve financial closure within six months.

This deadline expired in June but was extended by a month as the firm financial package submitted by the company was not accepted by the TNEB.

In its firm financial package, Videocon Power had mentioned a capital cost of Rs. 4,666.87 crores. The TNEB objected to this as the capital cost approved in the techno-economic clearance was Rs. 4,423.83 crores. Subsequently, Videocon Power submitted a revised financing package a day before the expiry of the extended deadline, with the capital cost pegged at Rs. 4,423.83 crores.

The Videocon project is among the six MoU-based projects which were granted escrow by the TNEB. While the 200 MW project of GMR Vasavi has begun generating electricity, construction work is apace on the other four.

With the escrow capacity freed from the termination of the Videocon project, TNEB hopes to allocate it to other projects on the lowest tariff basis based on the Crisil report. Crisil has been asked to give some clarifications, after which a decision is e xpected to be taken on re-allocating the escrow capacity. It is stated the 1,850 MW LNG-based project and the 500 MW lignite-based project at Jayamkondam of the Reliance consortium have the lowest tariffs among the independent power projects.