Foreign powers
The Union finance ministry has decided to get all future power purchase agreements (PPA) between foreign investors and the state electricity boards (SEBs) vetted by competent foreign consultancy organisations before giving its approval.
This follows the decision of the Union power ministry requiring the finance ministry to provide counter guarantees to the foreign investors in the power sector, and a ruling by the Bombay High Court ordering the scrutiny of the environmental clearance given to the Dabhol Power Plant promoted by the US giant, Enron.
The first company to have its agreement vetted by foreign consultants was AES Corp, which is setting up a powerplant in Andhra Pradesh. Following the scrutiny last week, the company had to bring down the tariff agreed upon with the State Electricity Board.
Sources in the finance ministry said that Indian consultants have been found inept in vetting PPAs as the concept is new and has gained significance only after relatively recent the entry of private promoters. The new finance ministry policy of vetting by foreign consultants would apply to the 7 "fast track projects" which are in the pipeline following agreements between SEBs and foreign investors over the past 2 years.
Meanwhile, those opposing the entry of foreign consultants doubt their credibility, saying that the funds for the vetting are coming from the World Bank, which they feel is biased in favour of the North.
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