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April 14, 2001
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Money > Business Headlines > Report April 14, 2001 |
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FIs cancel Rs 163.06 billion power loansS Ravindran In a major blow to the power sector, financial institutions, led by the Industrial Development Bank of India, have decided to cancel assistance to 10 power projects that together represent an investment of Rs 163.06 billion. The decision was taken because these projects failed to take off for a long time after the funds were sanctioned. The projects would have together generated 3,657 mw of power. Confirming the development, a senior institution official said the decision was taken at a recent meeting of senior executives of financial institutions, attended by representatives of all the lenders to the projects, including the banks. Industry observers say this decision virtually sounds the death knell for these projects. The projects affected include the Daewoo-promoted 1,070 mw venture in Madhya Pradesh, the 703 mw project in Rajasthan promoted by the RPG group, the two 525 mw projects promoted by the Spic group and Trishakti Energy in Tamil Nadu, and smaller projects like Atria Power (106 mw), Chambal Power (167 mw),GBL Power (166 mw), Phoenix Power (175 mw), and two Sujana Power-promoted projects at Tuticorin and Gangikondan (both of 110 mw). "Funds for these projects had been sanctioned quite a long time back. However, the projects have not got off the ground and there has been little or no disbursement of funds. Under the circumstances, it made no sense to continue with the sanctions," the official said. FI officials cited the poor financial health of the state electricity boards as the primary reason for the mess. For instance, the Karnataka state electricity board cannot offer any payment security facility like an escrow account. A committee headed by HDFC chairman Deepak Parekh had come to the conclusion that there was no escrow capacity in the state. Three major power projects have escaped the institutional axe. They are the AV Birla group-promoted 578 mw Bina project in Madhya Pradesh, the Hinduja-promoted 1,040 mw project at Visakhapatnam in Andhra Pradesh and the 1,050 mw Videocon group-promoted project in Tamil Nadu. "We don't expect these projects to fructify in the near future. However, the crisis resolution group felt that these are last mile projects. Consequently, sanctions to these projects will continue for some more time," an FI source said. Powered by ALSO READ:
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