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Redtape-weary Cogentrix abandons Mangalore power project

The power ministry today declined to comment on the Cogentrix's decision to abandon its 1,000 mega-watt fast track Mangalore power project.

Power ministry sources said the matter was sub judice and they would not contemplate anything about the future course. They, however, said they were hopeful that it would not have adverse impact on foreign investments particularly in the power sector.

The situation was so fluid that anything could happen, they added.

They said the terms and conditions offered to Cogentrix may be difficult to maintain as it was a competitively bid project, not a tariff bid project.

Power Minister P R Kumaramangalam had said that the Union Cabinet would give clearance to the project subject to the decision of the Supreme Court which is seized of the matter.

Karnataka Chief Minister S M Krishna, who is New Delhi on an official visit, was not available for comment.

Earlier in the day, Hong Kong power supplier CLP Holdings Limited and its US partner Cogentrix announced that they have decided to stop the development of the US $ 1.3 billion power project in Mangalore.

The 1,000 MW coal-fired power plant is one of the eight "fast track" power projects and has been under development since 1992.

CLP Power International has been involved in the project since 1995. "However, efforts to construct the project have been thwarted by delays in obtaining required government approvals and agreements, and in resolving public interest litigations," the Hong Kong power firm said in a statement.

The company said the continued development of the project is no longer feasible as a result of the delays. Despite this pull-out, CLP Power International said it remained committed to developing the power market in India.

The company, together with the Tata Group submitted a proposal in August and had been pre-qualified to bid for the 2,000 MW Pipavav Power Project in Gujarat. CLP Power International was also considering other investment and project development opportunities in India, it said.

Reacting to the pull-out, a top Indian official said it would not deter other prospective investors. "I don`t think it should give a wrong signal. There are other projects which have achieved financial closure which would send good signals," Power Secretary V K Pandit said. He however declined to comment further saying that the matter was sub judice.

UNI/Reuters

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