Sources in the power ministry told The Financial Express that aRussian delegation had recently met the powers that be in the ministry andexpressed willingness to invest $250 million (roughly Rs 1,000 crore) in thefive power stations set up with Soviet assistance. The Russians haveproposed to utilise the balance of trade surplus with India for thispurpose. Not only that, the Russians have also proposed to invest at least50 per cent of the total amount of Rs 1,000 crore for Indian sub-contractorswho would execute the projects for them.

The power stations are Obra I and II and Harduaganj in Uttar Pradesh, Korbain Madhya Pradesh and Patratu in Bihar. All the stations are badly in needof R&M works given the fact that the existing PLF (plant load factor) ofthese stations is an abysmally low 20 to 25 per cent, ministry sources said.It may be mentioned that the Russian government has already carried out therenovation and modernisation of the Neyveli stage I power station recentlyin 1997-98 itself.

It is understood that the Russian government has offered to route thisinvestment through the Power Finance Corporation (PFC) at extremelyreasonable and competitive rates. However, the exact specifics of the ratesare still being kept confidential given the fact that there are severalcompetitors for R&M projects in the fray - foremost among them being theNTPC-ABB Alsthom combine and the BHEL-Siemens joint venture set upexclusively to execute such projects.

According to sources, the Russian delegation has decided on the PFC routefor its investment to ensure proper financing and utilisation of theinvestment as well as the fact that this would provide them with therequired guarantees for their investment given the dubious reputation of thestate electricity boards involved.

Ministry sources said that while the power ministry and the PFC were stilldeliberating the matter, what went in favour of the Russian offer was thefact that since they had set up the power stations in question, they notonly had their own equipment for carrying out the R&M works but also had thedesign and spareparts for speedy execution of the projects. In addition, itwould also ensure utilisation of the balance of trade surplus to thesatisfaction of both Russia and India, sources said.

It is believed that in case the state governments concerned are agreeable tothe terms and conditions of the Russian offer as and when it is made tothem, then the power ministry has the power to decide in favour of the offerwithout even going in for tendering of the projects, revealed knowledgeableministry sources.

At this juncture it may be mentioned that Soviet participation in Indianpower projects dates back to the late '50s and early '60s when they supplied26 50mw units to the country which were brought from Russia and installedunder their supervision. Thereafter, they attempted to make a comeack in theearly 80s when they bagged contracts for setting up the Vindhyachal andKahalgaon projects for NTPC in addition to Kayakulum and Mangalore. However,the subsequent disintegration of the former USSR put an end to theirparticipation. And it is only now, after having restructured their industrythat they are once again attempting to stage a comeback, sources said.