Atria Power Corporation may seek legal recourse with the Karnataka state government refusing financial security to the company’s 103 MW mounted project. The state government has refused financial security as assigning revenues from circles would result in impediments, which in turn would lead to undervaluation of distribution circles when privatised. Besides this, Karnataka Power Transmission Corporation has also expressed apprehensions resulting from the high tariff of liquid fuel projects. This has led to a delay in the financial closure of the project.

If financial closure for the project is not achieved by September end 2000, Atria Power Corporation would have to pay Eline of Austria, the EPC contractors for the project, consequential liabilities as part of the contract between the two.

The debt component of the project is Rs.238 crore of which at least Rs.100 crore would be in the form of foreign debt. IDBI the lead financier of the project has made an escrow cover.