Govt streamlines counter guarantees

NEW DELHI, May 17: The government today cleared a proposal to streamline procedure for issue of counter guarantees to private power projects. The union cabinet today approved a proposal to amend basic conditions, coverage and procedures for issue of counter guarantees to eligible projects, as the earlier rules had proved cumbersome.

Counter guarantees will now be limited to payment of outstanding foreign debts only in case of adverse events lead to termination of the contract, an official release said.

There is no government liability on annual payment of energy charges to independent power producers IIP as provided in the earlier scheme, it said. The returns to IPP have also been curtailed by not allowing income tax payment on bonus generation.