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Journalism of Courage
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New Delhi, Aug 24: Daewoo Power India has pulled out of the 1,070 MW Korba (east) thermal power project, becoming the third foreign firm to withdraw from Indian power projects this year.
The firm, an equal joint venture between South Korea’s Daewoo Power and ABB Energy Ventures Ltd, withdrew from the project following refusal by the Madhya Pradesh state electricity board to grant escrow cover before the project attained financial closure, a senior ABB official told Reuters on Thursday.
The cost of the project is estimated to be above $1.0 billion. The official said the electricity board had insisted that the project attain financial closure before it could be granted an escrow cover.
"But which lender would have given funds to the project without the escrow cover. Daewoo Power India had paid a security deposit of $28 million. For them to recover this security deposit, it was necessary to terminate the power purchase agreement," he said.
ABB Energy Ventures is part of the Swiss-Swedish engineering group ABB. The project is due to come up at Korba in Madhya Pradesh state. The withdrawal is the third this year by foreign companies from power projects initiated after India opened the power sector to private players in 1992.
In January, US-based Cogentrix Energy Inc pulled out of a joint venture with Hong Kong-based China Light & Power Company for a $1.3 billion 1,000-MW power project in the southern state of Karnataka.
In July, French state-owned Electricite de France withdrew from a $1.1 billion, 1,000-MW joint venture in Maharashtra.
