Accord signed for Rs. 640 cr. project

By Our Special Correspondent

BANGALORE, OCT. 15. Continuing on the path of power sector reforms, the Karnataka Government today reached a milestone when a multi-partite agreement was signed by the Government, the Infrastructure Development Finance Company (IDFC), Andhra Bank and the Karnataka Power Transmission Corporation Limited (KPTCL).

The KPCL proposes to install an additional unit of 210 MW at an estimated cost of Rs. 640 crores at Raichur. The project with a per MW cost of about Rs. three crores is said to be the lowest in the country and would provide 1,400 million units per annum.

The agreement was signed by the heads of these institutions in the presence of the Chief Minister, Mr. S.M. Krishna.

The Chief Minister reiterated the Government's commitment to power sector reforms and agreed with the view mooted earlier by the Deputy Chairman of the State Planning Board, Mr. Jairam Ramesh, on seeking private partnership in such endeavours. While Mr. Ramesh had sought disinvestment of KPCL, Mr. Krishna, however, referred to joint ventures with private enterprises. ``We are certainly looking for a private sector partner for the 500 MW Vijayanagar plant.''

He referred to the aggressive steps taken by the State Government in seeing several of the projects through and mentioned that the Finance Ministry had cleared the proposal for World Bank funding of Rs. 6,500 crores in the power sector; the Rs. 1,000-crore project for reconstruction of tanks to improve ground water availability; and the Rs. 1,200-crore road development project.

Talking about the agreement, he said the conditions were stiff and welcomed them, stating that ``only then can we achieve''.

The multipartite agreement, it is said, would ensure that the reforms process would take a definite shape within a time-bound schedule and improve the cash flows in the sector, thereby reviving the health of the KPTCL and the KPCL. In the absence of escrow as decided by the State Government after accepting the Deepak Parekh Committee report, this agreement is said to be an alternative to facilitate funding of future power projects.

Andhra Bank has committed to funding the project to an extent of Rs. 100 crores, of which it will immediately release Rs. 50 crores, pending approval.

At today's signing ceremony, the Chief Minister gave a letter of award for the main Boiler Turbine Generator (BTG) package costing Rs. 365 crores to the Chairman and Managing Director of BHEL, Mr. K.G.Ramachandran.

In his address, Mr. Jairam Ramesh said investment by the KPCL was as important as its disinvestment. It was necessary to look at the KPCL as a venture capitalist and a project developer. He said that the private sector did not have the ability to take risks and it would not be a major generator for the next ten years.

In the light of this, the model adopted by Karnataka of propping public sector for power generation and encouraging private sector for distribution appeared to be the right one, he remarked.

Mr. Deepak Parekh, Chairman, IDFC, said Karnataka was embarking on a journey of power sector reforms, and the IDFC would support this endeavour.

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Section  : Southern States
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