He added that corporates would have to back the projects with their own guarantees since state electricity boards (SEBs) can no longer offer the escrow cover to all the projects. Large corporates should not have problems in financing projects without escrow cover, said Kumarmangalam, adding that different mechanisms should be developed as alternatives. The escrow facility has been asked primarily because some of the SEBs are not in good financial health and their capacity to pay is suspect. This is expected to improve once the states set up the electricity regulatory commissions.

Besides, the Power Trading Corporation (PTC) will ease the problem as IPPs will not deal with SEBs directly. Those IPPs which supply power to two or more states willsign a power purchase agreement (PPA) with PTC.

Projects which have already been given an escrow commitment will be entitled to the facility once they are commissioned, he said. "We have settled the escrow issue in Tamil Nadu and decided that it can commit the escrow up to 2,038 mw and Andhra Pradesh can give up to 2,500 mw," he said.

In Madhya Pradesh, the hydel power plant to be set up by the S Kumars has got a final commitment on an escrow facility. The state has also committed the same to other projects, including Daewoo (1070 mw), Bina (578 mw), ITPL (420mw), Raigarh (550mw) and Pench (500). However, this will depend on the high court's judgment on a case filed by other power companies.

Six power companies have challenged the state's project selection criteria. The matter is pending with the court and the escrow is also linked with the case.

Talking about the delay in implementation of several projects, the minister said projects which have the escrow facility and fuel linkage should achievefinancial closure in around six months.

In Maharahstra, talks are on for two IPPs, including the 410 mw naphtha-based Patalganga power plant of Reliance industries and the 1082 mw coal-fired Bhadravati project of Ispat Industries.

"We have decided to allocate coal mines from the Western Coalfields if the company has a problem in developing mines at the site earlier allocated to it," he said. The Central India Coal Company (CICO) promoted by Ispat Industries to is meet the entire coal demand of the power project. However, the coal company is facing problems as the coal mines are located close to a defence factory.

On the funding programme of the National Thermal Power Corporation (NTPC) in the wake of the World Bank denying financial assistance, Kumarmangalam said that NTPC has a sound debt equity ratio of around 50:50, giving it enough leverage to raise debt.

Besides, NTPC's outstandings have reduced significantly, he said, adding that the current payments are in fact being made quite regularly. Theproblem is with the arrears. The ministry is already working on a payment schedule with the SEBs.

According to Kumarmangalam, the power scenario improving. The mega power projects will also be finalised soon. In a couple of weeks the Centre will announce qualifications for two LNG-based power projects of 1,000 mw each on the west coast.