RELIANCE
DUMPS JAMNAGAR POWER PROJECT
Reliance Power Ltd, a Reliance group company, has dropped its
Rs 2,000 crore petcoke-based power generation project in Jamnagar.
The project could
not achieve financial closer as a result of changes made to
the terms and condition for government guarantee and the power
purchase agreement, said sources.
Reliance proposed
to set up 500 MW power project using petcoke, a residue of
its Jamnager refinery, as fuel for the project. However, it
may now opt to sell the petcoke in the open market, the sources
added. The Jamnagar refinery, the largest grassroots refinery
in the world, produces 8,000 tonnes of petcoke a year.
This is the second
power project in the state Reliance has dumped within a year.
Earlier in November 2003, the company opted out of the 375
MW lignite-based power project at Ghogha near Bhavnagar -
a project now being pursued by local FMCG firm Nirma.
Gujarat government
officials confirmed the development. They said "Non-finalisation
of payment security mechanism (PSM) is one of the main factors
for delay in achieving the financial closer for the project."
Sources pointed
out that the bone of contention in fixing the PSM was the
Gujarat government's guarantee and escrow agreement for the
project, for which the MoU was signed in the year 1994.
The state had proposed
to reduce the guarantee amount for the project from Rs 2,200
crore to Rs 900 crore, which covered less than 50% of the
required debt amount of the total project cost, as against
coverage for full settlement of outstanding payments as per
the provision of the PPA.
Beside, structure
of escrow arrangement proposed by the Gujarat Electricity
Board was also not acceptable to the lenders of the project.
The sources said
another reason for Reliance to drop the project are the terms
of the renegotiated PPA.
