Enron pulls out from Kannur project

By Our Special Correspondent

NEW DELHI, FEB 2. Enron has bowed out of the Kannur power project, thus enabling the Central Electricity Authority (CEA) to accord its techno-economic clearance. The 513-MW power project in Kerala's Kannur district had received all the statutory clearances from the State and Central governments but was awaiting the techno-economic clearance for two years mainly on the Kerala Government's insistence on excluding Enron from taking up a sizable equity stake.

The CEA in its meeting on January 28 cleared the project provided the promoters brought in a new co-promoter within six months, as was suggested by the State Government. This may prove to be a tough task because the debt equity ratio was fixed at 70:30 with 74 per cent equity as foreign and 26 per cent Indian. The foreign and Indian portions of the loan have been restructured in the ratio of 60:40. The revised ratio was suggested by the promoters to reduce the dependence brought about by foreign exchange variation on the tariff. The Rs. 1,471-crore project promoted by KPP Nambiar & Associates will give electricity at a per megawatt rate of Rs. 2.867 crores, making it one of the cheapest power projects, said a company news release.

The project cost proposed by the State Government was Rs. 1,575 crores but in the revised submission, the promoters unilaterally reduced the cost by Rs. 104 crores. This will have a favourable impact on tariff since it is based on capital cost (fixed cost component) and fuel cost (variable cost).

The project, known as Kannur Power Projects Limited (KPPL), has signed an MoU with Petronet for the supply of natural gas simultaneously with the setting up of LNG terminal at Kochi by 2005. The company is yet to decide on the fuel in the interim period. It already has allocation of 6.41 lakh tonnes per annum of naphtha.

The project cost was fixed with a foreign component of $211 millions (estimated at Rs. 42 per dollar) and rupee component of Rs. 586 crores. The chief promoter of the project, Mr. Nambiar, was Secretary in the Central Department of Electronics, chief of ITI Limited and founder Chairman of Keltron.

Send this article to Friends by E-Mail

Section  : Business
Previous : Millennium Business Park launched
Next     : A decline to worry about