The Hindu : Andhra Pradesh News : No headway on Austrian aid for Godavari-based projects

Online edition of India's National Newspaper
Sunday, Feb 20, 2005

Andhra Pradesh

Andhra Pradesh

No headway on Austrian aid for Godavari-based projects

By M. Malleswara Rao

HYDERABAD, FEB. 19. The visit by the Austrian President, Heinz Fischer, to the State has come as a disappointment regarding the big loan sought for implementing Godavari-based projects.

The proposal, in cold storage for some time now, did not make headway despite a meeting by the Chief Minister, Y. S. Rajasekhara Reddy, yesterday with Mr. Fischer, it is reliably learnt. Mr. Fischer left the city on Saturday without a word on the Rs. 4,300-crore loan on which an understanding was announced by the Government as having been reached. He came here twice earlier, at the head of the Austrian delegation in connection with the loan before being elected President.

Now that Mr. Fischer is in power, the officials expected a breakthrough. But a new problem cropped up. During discussions yesterday, the Government was stated to have ruled out special preference to Austrian firms in awarding contracts to execute the projects saying they too should participate in the competitive bidding in the event of the loan materialising. This, according to sources, came as a shock to the consortium officials.

The main hitch for the loan is from Delhi. The Centre has reportedly refused to give counter-guarantee for the loan, citing its recent policy decision not to give this benefit to any State. The consortium, on the other hand, wants only Central counter-guarantee, not satisfied with the one given by the Power Finance Corporation.

Official sources said the PFC counter-guarantee had been provided as two of the projects to be executed with the loan, were hydel stations — Dummagudem and Singareddypalli.

Meet in Delhi

It appears that the Union Ministers for Finance and Energy, during their meeting with Mr. Fischer in Delhi the other day, pledged to extend cooperation to whatever venture taken up by Austria but they did not resolve the Andhra Pradesh issue referring to the policy decision. Efforts are on to provide a second layer counter-guarantee by the AP Genco. Time alone will tell if this also will satisfy the consortium.

The proposal faced its first trouble when a retired engineer here wrote to the Austria Government objecting to the loan and complaining how World Bank loans "enslaved" the State.

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