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Anupama Airy
NEW DELHI, DEC 13: State Bank of India has agreed to release the bank's lien on the receivables of the Tamil Nadu State Electricity Board (TNEB) and has given its consent to the board for signing escrow agreements with four independent power producers' (IPP) projects. The consent is, however, subject to stiff conditions.
The four IPP projects shortlisted by TNEB for opening of escrow accounts are the 250mw Neyveli Zero ST-CMS, 200mw GMR Vasavi Power Corporation, 106mw Samayanallur Balaji Power Corp and 105mw Samalpatti Power Company project.
Official sources said that while extending this conditional clearance, SBI has asked the board to allocate identified receivables, at the current level, to the banks to the extent of Rs 125 crore, representing the present non-fund based limit for letters of credit (LoC).
State Bank has also asked TNEB to give an undertaking that the board would maintain at least 125 per cent of this non fund based limit as uncommitted revenue by 2001-02. Sources said that whereasearlier, State Bank was unwilling to accept the state government's guarantee, it has now conveyed that as against the cash limit of Rs 120 crore, the guarantees of the state government would be accepted by the banks.
As against the board's average monthly revenue of Rs 432 crore, the monthly escrow amount for the four IPP projects, at the 1997-98 revenue levels, works out to be Rs 86 crore.
State Bank has also given its consent for covering the Videocon power project escrow of about Rs 79 crore at 1997-98 levels of revenue. However, the bank has asked TNEB not to link the Videocon escrow with the other four IPPs but to take it up separately. Videocon Power is setting up a 1050mw North Madras TPP ST-II project in the state. After securing SBI's go-ahead, TNEB has now written to the Power Finance Corporation (PFC) for its consent on signing of these escrow agreements.
TNEB has also sought the intervention of the power ministry in this regard, as lack of escrow covers is delaying financial closure forthese projects. Sources said that the chairman TNEB has requested the nodal ministry to see that by December, 15, 1999, the board is in a position to sign escrow agreements with the IPPs.
However, with PFC'c consent still pending, it does not seem that TNEB will be able to keep this deadline as it is yet to receive PFC's consent on releasing its charge on receivables.
INSIGHT
Shape of things to come
TNEB is as bankrupt as any other power with the probable exception of UPSEB. In TN, power is provided free to farmers. As a result, T&D loss gets treated as agricultural consumption, and no initiative is taken by the board to improve T&D losses. If SBI can finance the IPPs in the state, it is logical to believe that even in other states (with stiffer conditions in some cases), financial closures on the TN line will be possible. It augurs well for power plant equipment manufacturers (notably ABB, because four of its projects in MP are stuck owing to a dispute on first charge on receivables).
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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