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Cogentrix sets conditions for Mangalore power project 'revival'

The Mangalore Power Company floated by the US multinational Cogentrix, on Wednesday set two conditions for the revival of the 1000 mega-watt power project near Mangalore, even as Karnataka Chief Minister S M Krishna convened a meeting of the state cabinet for Thursday to discuss the issue.

Talking to media-person after meeting Krishna, MPC Managing Director Ron Somers said the national and the state governments should indicate to Cogentrix Energy Inc and China Light and Power International that there was a "commanality of interest" to put the project back on the "fast track".

The state government should honour its commitment to stand by the Power Purchase Agreement, signed in November 1997, while the Centre should provide it with a draft counter-guarantee for evaluation by the project sponsors.

"If these positive signals were to come, I can recommend to the board for revival of the project," Somers said.

The national and state governments should give time-bound commitments to resolve all outstanding issues before he could recommend reconsideration of the withdrawal of Cogentrix from the project. "There has to be certainty at the end of the tunnel," he said.

He firmly ruled out renegotiation of the PPA, which was approved after three full years of negotiations. The PPA was in conformity with the government policies, he said while seeking the state government to confirm its commitment to the terms and conditions of the executed contract.

Somers claimed that the tariff of power fixed at Rs 2.51 per unit under the PPA was the cheapest among the projects approved by the national government.

The PPA had been kept in suspended animation for the past 20 months, he said. The subsequent notifications by the Centre must be 'prospective, not retroactive', he said while referring to the June 9, 1998, notification of the Union government, which laid down certain conditions in respect of PPAs to be signed by the private power producers.

Stating that the company had spent $27 million for the development of the project so far, Somers said his company had been developing the project in good faith for the past seven-and-a-half years. It was now the government's turn to demonstrate its commitment.

"Such large infrastructure projects stand no chance of success, unless there is sufficient political will and interest to move them forward," he added.

Karnataka Cabinet to decide on Cogentrix on Dec 16

The Karnataka cabinet will take a decision Thursday on the fate of the controversial 1000 MW power project.

Chief Minister S M Krishna said on Wednesday evening that discussions were general in nature and it included the PPA.

He said he had not given any specific assurance to Somers. As the project had already been cleared, there would not be any problem. The state was keen on having the project and the technical matters would be discussed by experts, he added.

Both the promoters had said after the Supreme Court verdict it did not alter their stand as two other issues, erosion in the economics of the project and delay in government clearances, were also cited as reasons for pulling out.

These two issues need to be addressed before they reconsider the decision, company sources said.

The sources maintained that the company was not ready to change the 1997 PPA. It was not in favour of incorporatimg amendments in conformity with the national government's June 1998 notification pertaining to independent power producers as it might affect the rate of return envisaged in the PPA. Any change would erode the economics of the project, they added.

The Union government has sought the state government's stand on the PPA before the counter guarantee could be issued. Power Minister R Kumaramangalam had also got an affirmation from the promoters about their continued interest in the project in view of their decision to pull out.

Ponder, don't pander, irate greens tell state govt

Meanwhile, the Environment Support Group and Janajagriti Samithi today urged the Karnataka government to examine whether the power project was still the best deal under the present circumstances.

The two organisations which vehemently oppose the project on environmental grounds, wanted the state government to seize the opportunity and ensure a deal for posterity "that is wise, transparent and non compromising of the wide public interest".

In a media statement, the two bodies said the power plant was plagued by high costs. "There are still arm-twisting conditions in the PPA like deemed generation, a second helping of fixed charges, unequal treatment for falling behind contract commitments for the State Electricity Board, which have not been set right."

The statement further said: "If foreign direct investment was of concern, the state's credibility would only improve if it threw open the power sector through competitive bidding. Not only would this ensure a level playing field, but would also provide an equal opportunity to Indian companies. The very much-maligned MoU route could then be given a decent burial and the counter-guarantee would have some value."

UNI

Cogentrix changes stance, says it won't review oull-out

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