The CESC spokesperson was unable to confirm the move, saying that chairman RP Goenka as well as managing director Sumantra Banerjee were not available for comment.

A high-level CESC team was expected to visit South Korea to finalise a deal with prospective partners for this project. The company has identified a Korean consortium as the engineering procurement contractor and is understood to be currently holding talks with them.

At CESC's annual general meeting last year, vice-chairman Sanjiv Goenka of the RPG flagship had announced that the West Bengal government has cleared the (250x2)mw project.

Though the company is yet to have a formal tie-up for funds, it was planned to tap international agencies like Manila-based Asian Development Bank and Washington-based International FinanceCorp. In 1995, the cost was at Rs 2235 crore and later revised to Rs 2065 crore.

Power generated by the Balagarh thermal station, 70km upstream of Calcutta on a riverine island, will be sold to CESC and sent to its licence area via a 220kv transmission line to be built by CESC.

Despite the fact that the Balagarh project is attractive to foreign collaborators, the tussle between the state power minister Sankar Sen and CESC Ltd on tariff revisions and fuel surcharge issue has affected the hunt for a suitable partner.

Moreover, the cost of the Budge Budge thermal project increased by Rs 670 crore from the earlier estimate of Rs 1638 crore which was cleared by the Central Electricity Authority. A committee of the West Bengal State Electricity Board had recommended a cost of Rs 1853 crore for the project. The issue is now before the CEA since CESC has found the view untenable.

The Balagarh project will be set up by Balagarh Power Co Ltd, a new outfit promoted by RPG Enterprises where CESC will be the mainpromoter.

According to CESC Ltd's accounts for the year to March 31, 1998, it has already spent Rs 44.27 crore for the Balagarh project as part of the pre-operative expenses. In fact, during 1997-98, CESC had spent around Rs 11.47 crore towards the Balagarh project.

It had then noted that the company was continuing its negotiations with proposed investors in the project and the amounts spent are proposed to be adjusted against shares to be issued to the company in due course.

However, skepticism remains whether CESC will be able to sell the power generated from Balagarh. Calculations by the company show that demand for power in Calcutta alone is expected to increase annually at four per cent.

Based on this, CESC is upbeat on the fact that there will be a fairly high demand around 2002-3 when the two units of Balagarh are expected to start operations.