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Environmentalist Leo Saldanha
Impact on local agriculture would have been drastic
 real 28k

Cogentrix spokesman Jeff Freeman
Opposition based on misinformation, misperception of technology
 real 28k

Friday, 10 December, 1999, 11:05 GMT
US firm quits power project




A US energy consortium has pulled out of a major power project in southern India because of red tape and legal problems.

Cogentrix Energy Inc said in a statement that despite being invited in by the Indian Government in 1992, the $1.3bn Mangalore power project in the state of Karnataka was no longer feasible.

The plant was to be a model facility, bringing in 1,000 mw of much needed electricity to the state.

Cogentrix blamed "delays in obtaining government approvals and resolving public interest litigation".


Cogentrix logo Company said project was not feasible
The statement said that the Mangalore Power Corporation would close down its offices in Delhi with immediate effect.

One of the other partners in the project, China Light and Power Limited, had already pulled out in 1995 following a dispute with the state government.

The project was then subject to legal proceedings after a case was brought alleging kickbacks were paid to get approval.

A verdict from the Supreme Court on that case is still pending.

Environmental groups also went to the courts, saying the proposed 1,000 Megawatt power plant could be harmful to local wildlife.

Disappointment

The chief minister of Karnataka, SM Krishna, expressed his disappointment at the decision of Cogentrix to pull out.

"The state government hopes that the decision of the board of directors of China Light and Power and Cogentrix is not irreversible, and that the project will materialise as soon as the Supreme Court decision is known," he said.

He said the Karnataka government had been fully supportive of the project at every stage.

Officials at the federal Ministry of Power in Delhi refused to comment on the development, saying only that they hoped it would not affect foreign investment in India.

The BBC's Habib Beary in Bangalore says the pull-out is being viewed as a severe blow because power is one of the sectors on top of the new government's priority list.

The new BJP-led administration has pledged to push ahead with economic reform in India in order to make the country more attractive to overseas investors.

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See also:
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