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Karnataka non-commital on PPA

Stalemate continued on Thursday over the clearance of the $ 1.3 billion Mangalore Power Project mooted by the US multinational Cogentrix Energy Inc.

The Karnataka government today referred a vital financial issue to a high power committee.

Briefing newsmen in Bangalore after the meeting, Karnataka's Information Minister B K Chandrashekhar said the affirmation of the Power Purchase Agreement, one of the conditions set by the company, did not come up for discussion.

He said the high-power committee, to be headed by eminent energy management expert Deepak Parekh, would consider among other things the issue of opening escrow account.

The demand for such an account was made by the company in its latest letter to the government, after it had ceased operations on December 9.

The setting up of the account by Karnataka Power Transmission Corporation Limited was necessary to allow the private producers draw the required funds matching the power generated and supplied to KPTCL by these companies.

The limits set for Karnataka was about Rs 4.5 billion, equivalent to the cost of power of 1,500 mega-watt. Chandrasekhar said the state government could take a decision on the PPA only after the national government clarified whether the June 8 notification would apply to the PPA signed in November 1997. The June 8 notification withdrew the exemption on income tax on bonus generation and fixed actual rate of auxiliary consumption and heat rate of the thermal projects.

When referred to the statement of Mangalore Power Company Managing Director Ron Somers that Union Power Minister Rangarajan Kumaramangalam had stated that the notification was only prospective, he said it was only a ``claim''.

He said the terms of reference for the high-power committee had not been framed as yet. If necessary, it might even look into the PPA suo motu. It may also consider the present power scenario in the state for issue of escrow account though no specific time-frame has been fixed.

The committee might give its recommendations in about two weeks time, he hoped. The state government would take a final decision after considering the recommendations.

Other members of the committee are eminent scientist and director of the National Institute of Advanced Studies, Roddam Narasimha, former Karnataka Electricity Board chairman B G Rudrappa, Chief Secretary B K Bhattacharya and Principal Secretary (finance). Principal Secretary (energy) would be the member-secretary of the committee.

Chandrasekhar reiterated that the government was firm in having the project cleared at the earliest and there were no second thoughts about it. A decision could be taken only after it received the clarification from the national government on its notification and also on the escrow account.

He said the escrow account issue came up only after the PPA was signed and the company had raised it in the letter it had submitted to the State after Somers met Kumaramangalam. The meeting took place after the Supreme Court verdict clearing the company of corruption charges.

Asked about a demand that the issue be referred to the newly set up power regulatory authority, he said the issue was not discussed at the state Cabinet meeting.

UNI

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