Sources said that increase in escrowable capacity of MPEB will be utilised to grant escrow to the Bhilai power project. The existing escrow of 2561 mw of MPEB is currently being utilised to give escrow protection to three-coal based projects promoted by Daewoo, Pench and Bina Power respectively. In a recent letter addressed to IDBI by the MP government (a copy of which is with The Financial Express), the state government has stressed on the need of increasing the escrowable capacity by 500 mw.

Recommending increase in the escrowable capacity, the letter reads as, "if enhancement of 500 mw in the escrowable capacity of the MPEB is considered, it will be used for providing escrow cover to BhialiPower project, promoted by L&T-SAIL-PSEG combine". It may be mentioned here that the Bhilai power project has been sponsored by SAIL to ensure supply of power on priority basis to Bhilai steel plant. The state government had earlier committed the revenue streams of Bhilai steel plant of SAIL and Hirmi cement plant of L&T to the Bhlai power project for escrow purposes.

It is felt that this commitment by the state government can be made as a condition by IDBI for allotment of escrow cover to Bhilai power supply company from MPEB/MP government.

In February this year, Bina Power Supply Company Limited (BPSCL) had even gone to the court, restraining the state authorities and the FIs from giving escrow to these three private sector power projects on the grounds that BPSCL was the first project in the state to get a letter from the state authorities, committing escrow for its project.

Other IPPs in the state had also gone to court against MPEB for adopting favouritism towards Daewoo, Bina and Pench powercompany's power projects. These IPPs included promoters of G.V.K. power project, SIT Power India, Bhander power Project, India Thermal Power, Jindal Power and Shapoorji Pallonji power besides BPSCL.

However by its order dated March, 19, 1999, the high court disposed of all the writs by referring the matter to an expert committee, to be constituted soon. This expert committee will be headed by Justice P N Bhagwati and other members of the Standing Independent Group (SIG), currently looking into the setting up of mega power projects. Besides SIG members, the expert committee will also have officials from MPEB and the state government.

Sources said that there has been resistance from within the government on the constitution of this committee and it is felt that the court's verdict on this should be treated as final. However, no formal decision has been taken in this regard as yet.

It may be recalled that the financial institutions have recently agreed to increase the escrowable capacity of Tamil NaduElectricity Board (TNEB) by 1000 mw, thereby taking it up to 3500 mw from 2500 mw. This has come as a big relief for the IPPs in the state.