In a letter to PK Mittal, EDF president (international division) Bo Kallstrand has said that after spending almost seven years as a co-promoter of the project, EDF has finally decided to call it quits.

The Indian office of EDF confirmed the pullout move. EDF officials, however, said the group was committed to its other projects in India related with transmission and distribution.

EDF had at one stage evinced interest in increasing its equity stake to 26 per cent. But the inordinate delay has prompted EDF to move out of the project completely.

In its letter, EDF has told the project promoters that "the executive committee of EDF went into the restructured proposal of the managing committee of the sponsors and did not find it acceptable on matters related to rate of return (RoR) on investment (that is, the 10-year tariff), as laid down by the promoters of the project." According to EDF, the stipulations laid down by the project developers over the RoR would turn the project unviable.

Despite Bhadravati being on the list of fast-track projects, its fate has been hanging fire for the past seven years. Even now, there is no clear commitment towards a proper escrow cover for the project, and the fuel-supply agreement has also not been finalised.

The project was to achieve financial closure in January 1998, followed by a six-month extension given by the Maharashtra government till September 1998.A revised power-purchase agreement was signed between the promoters and the state government in August 1998, and it was expected the promoters would achieve financial closure by end-1999. However, no substantial progress was made, as a result of which EDF decided to pull out of the project.

EDF's withdrawal is yet another instance of a multinational company pulling out of a domestic power project. The trend started with the Mangalore Power Project, when in December 1999 US power major Cogentrix announced its exit. More recent examples of companies following the trend are National Power and Powergen.