Counter-guarantee for Neyveli project signed

The counter-guarantee, for 219-million dollar debt part of the project, would come into effect once the financial closure is achieved.

This is the fifth of the seven fast-track power projects to sign counter- guarantees. The counter-guarantee would not be operational until the state governmentsets up the State Electricity Regulatory Commission (SERC).

The agreement was signed by Joint Secretary in Finance Ministry Gajendra Haldea and CMS managing director David Weaver.

The levelised tariff for the project is estimated at Rs 2.5 per unit for the next 30 years and the cost of power from the project is worked out to be Rs 4.8 crore per mega watt, S Mohan Gurunath, managing director of the project, said.

However, the cost of the project is being reviewed and would be finalised after Tamil Nadu Electricity Board certifies the "reasonability" of the cost.

The Government was also reviewing the 40-per cent cap on raising resources domestically by independent power producers (IPPs), Power Minister P R Kumaramangalam, who was also present at the ceremony, said.

He refused to divulge details saying the matter had to be placed before the Cabinet after the group of ministers reviewed it.

On the issue of escrow account for IPPs, Kumaramangalam said the Government had a positive view on the issue andall these would be part of the package to be announced next month.

The counter-guarantee for the 1.2-billion dollar Hinduja project to set up a 1040-mw power plant in Visakhapatnam in Andhra Pradesh was "almost ready", Sinha said.