If you want an escrow account, get a good agent

Vol 3, PW 25 (19 Jan 00) People & Policy

They say it is who you know and not what you know that is important for success and nowhere is this more true than in India.

Take the case of Mr. JK Ramaswamy (not his real name), head of JKY Energy Company (not the real name of his company), a non-descript firm based in Madras, which until recently earned its money be providing cleaning services to power companies and refineries.

Today, in Tamil Nadu, Ramaswamy is considered a man of clout, not because of his turnover (which in 1994 was a paltry $3.5m) but for his proximity to the states new power minister, Mr.Arcot Veeraswamy.

Both men belong to the same Naidu caste and both men are lobbying hard to obtain an escrow facility for the 1,320-MW thermal power project at Cuddalore, promoted by the Cuddalore Power Company. The projects main promoter is the Malaysian-based Non Resident Indian (NRI), Chandrasekhar Subbiah.

This report understands that Subbiah has hired Ramaswamy as his agent in India with a clear mandate: to ensure that the Cuddalore Power Company is given escrow cover ahead of others. In recent weeks, a correspondent for Petrowatch has been surprised at the renewed vigour with which Veeraswamy is actively lobbying for the Cuddalore Power Project, a Non-Prestige plant compared to the LNG-fired 1,886-MW project at Ennore.

Until recently, the fate of Cuddalore - first approved by the former state government of Jayaram Jayalalitha has remained in limbo. But in recent days it has obtained Techno-Economic Clearance (TEC) from the Central Electricity Authority (CEA) in record quick time.

Veerasamy is now trying to get mega power project status, ahead of the all-important escrow facility. Talking to Petrowatch, JKY Energy Company exudes inexplicable confidence about the subject.

Our correspondent writes: One employee told me that things are moving but when I asked how the project would get an escrow account, his response was a pregnant-with-meaning smile. If Cuddalore succeeds in getting escrow before Ennore, most will know why.