MUMBAI: Little-known Mumbai-based Swan Energy (SEL) has pulled out of the 700-MW gas-based power project, in Gujarat, after being caught in a political firestorm over alleged largesse bestowed on it by the state government firms.
SEL signed a deal in 2010 with two companies – Gujarat State Petroleum Corporation and Gujarat Power Corporation – for a 49% stake in GSPC Pipavav Power Company ( GPPC). SEL agreed to pay 381 crore and received 70% of the carbon credits assigned to the project.
But a few months after signing the share purchase agreement in January 2010, a public interest litigation (PIL) was filed in the Gujarat High Court challenging the legality of offering 49% to SEL. The opposition Congress party then jumped in the fray accusing the Narendra Modi government of ‘unprecedented corruption and nepotism’.
In an interview in 2010, Shaktisinh Gohil, the opposition leader said that the Swan deal was a massive 14,296-crore scam and asked for an explanation into the allotment of the project’s 70% carbon emission rights for someone with a 49% stake.
A few weeks ago, Swan voluntarily chose to withdraw from the project saying that the delay was affecting its plans.
“The inordinate delay in allotting the shares and the pendency of the PIL was jeopardising other business plans and was causing losses by way of interest and other business opportunities. Swan had requested for refund of 125 crore along with interest and damages,” said a senior company official, who did not wish to be identified.
The company officially declined to comment on the development.
On March 30, the Gujarat High Court dismissed the PIL saying that it is infructuous after SEL’s withdrawal from the project.
People close to the development attributed the withdrawal to the sudden crash in the global volume for carbon emission rights.
One official said that SEL is expected to receive 125-crore refund from GPCC in a week, which was invested as part of subscription in the JV. Both the companies are expected to negotiate on the interest payment after this receipt.
SEL is developing a floating storage and regasification unit (FSRU) project for importing liquefied natural gas intoIndiafor re-gasification. The 2,500-crore project is being implemented at Pipavav inGujaratwith a debt-equity ratio of 3:1.
SEL is in the process of raising funds for the projects, and expects the financial closure by September 2012. The project has a capacity of 3 million metric tonne per annum (MMTPA) of LNG, which is expandable to 10 MMTPA.