Escrow by any means in southern India

Vol 4, PW 7 (10 May 00) Midstream & Downstream

Promoters of the Ennore LNG project are keen to dispel the notion that it will die because ofslow progress on the escrow issue, or 'Credit Support Guarantee', as state authorities call it.

"Dabhol closed in late 1998 and that was in development for six years," a consortium member tells Petrowatch, "We were awarded the project 16 months ago. So, on a relative time-scale, I'd say we are ahead of the curve." Unlike Dabhol, the Ennore promoters are dealing with four different state authorities andfour different sets of rules.

"The key issue to understand is that credit support mechanisms are not the same from state to state," he said, "It may or may not be escrow that we get. It may be something else." He added: "We need a viable credit support mechanism to achieve financial closure.

There's no question about it. But it doesn't necessarily have to come from the State Electricity Boards (SEB).

It could come from a variety of sources. That's up to the government to decide.

We can't tell them what to do." A second consortium spokesman said state governments are reluctant to commit escrow cover because they exhausted earlier limits by awarding on a "first come, first serve basis" to commercially unfeasible projects. "When they have good projects like ours they don't have any escrow cover left," he said, "They have to find other means of finding the cover.

For example, Tamil Nadu is trying to give us credit support outside electricity board revenue." Obstacles aside, the Ennore promoters hope to reach agreement in time to meet the 1st quarter 2001 deadline for financial closure.