Cogentrix denies setting fresh terms

Company Managing Director Ron Somers had, on December 15, set forth two conditions before the State and Central governments to recommend to his board consisting of members of Cogentrix and China Light and Power International, promoters of the MPC.

The State Cabinet which met on Thursday did not discuss the PPA while referring to a high power committee the need for incorporating escrow cover setting up of a separate account for Rs 450 to Rs 500 crore equivalent to 1500 mw of power generation for independent power producers to withdraw the cost of power fed to the State grid.

The release said MPC expected the State Government and the Karnataka Power Transmission Corporation Ltd to adhere to the terms of the power purchase agreement PPA which was signed on November 17, 1997. The Union Power Ministry had in a notification on June 9 last year, made changes pertaining to operation parameters such as heat rate8217; and auxiliary consumption8217;. In a clarification issued on July 22, the ministry had also stated that the notification was prospective and shall apply only to PPAs which have not been executed and delivered prior to the issuance date of the notification.

Therefore, the release said, MPC was justified in its stand that the June 9, 1998 notification did not apply to them.

Regarding the escrow account, the company stated that the then state power secretary K P Singh had on September 12, 1996, confirmed to the Union Power Ministry that all stipulations laid down by the Union government on the issue of counter guarantee were acceptable to the State Government. The stipulations included maintaining an escrow account. In July this year, the company had written to the state government to take affirmative steps to issue escrow and finalise PPAs amendment pursuant to its obligations under the state support agreement.