Daewoo Corporation to pull out of Rs 1,500-crore Punjab power plan
Anupma Airy
NEW DELHI, December 28: The $65-billion South Korean giant, Daewoo Corporation, has decided to shelve its plans to take up the Rs 1,500-crore, 168MW Shahpurkhandi-A hydro electric power project in Punjab.Sources said the Korean power major has already conveyed its decision to the Punjab State Electricity Board (PSEB), which had shortlisted Daewoo Corporation 18 months ago through international competitive bidding. Sources disclosed that until last month, Daewoo Corporation held discussions with the state electricity board and was following it up with various issues related to the project. However, it was decided at a recent high-level internal meeting at the company's headquarters that Daewoo should opt out of the project. State electricity board sources said the decision had been orally communicated to them and that nothing from the company had come in writing so far. A possible reason for this, sources say, could be that the bank guarantee for the project, which Daewoo got extended a couple of
weeks ago, holds good till March next year. The company preferably wants to maintain a silence on the issue till then. State electricity board sources said that after the competitive bidding for the project in August last year, two companies were shortlisted for the Shahpurkhandi project, which included Daewoo Corporation and a Delhi-based company called Subash Projects. However, the latter was dropped as it did not make the earnest money deposit (EMD) for the project, leaving Daewoo the only interested party in the project, sources said. Sources said that after nearly two years of waiting and incurring huge expenditure on account of the initial development cost -- including the fees for extending the bank guarantees -- Daewoo Corporation decided to wash its hands of the project. Sources said that following a official communication from the state electricity board asking the company to extend its bank guarantee, Daewoo got it extended till March next year, clearly indicating its interests in going ahead
with the project. However, according to sources, yet another communication was sent by the board to the company saying that the project had been kept in abeyance and that Daewoo should wait. It was after this that Daewoo apparently decided against going ahead with the project. Indefinite delays on the part of state board and its worsening financial state are also being viewed as major reasons which made Daewoo withdraw from the project. The state electricity board's annual losses are reported to be about Rs 1,000 crore. To date, not one private power project offered by it has been commissioned in the state.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
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