Supreme court backs Cogentrix power project,public interest suit quashed
(adds comments from project chief, India's power minister in paras 4,5, 18-20)
By Y.P. Rajesh
BANGALORE, India, Dec 13 (Reuters) - India's Supreme Court on Monday quashed a public interest suit which had contributed to last week's withdrawal of a $1.3-billion international power project in the southern Indian state of Karnataka.
In a one-line judgement, the court said it had overturned a judgement of the Karnataka High Court which had ordered a federal Central Bureau of Investigation (CBI) inquiry into allegations of wrongdoing by the Mangalore Power Company (MPC).
``The Supreme Court of India today quashed the impugned judgement of the Karnataka High Court, clearing the 1,000 MW Mangalore Project of any wrongdoing with respect to cost-padding, kickbacks and bribery,' MPC said in a statement.
Later, MPC's managing director Ron Somers said the firm would review its decision to pull out of the project following the court ruling.
``The decision we have taken remains, but with this new information there has to be a reassessment,' Somers told reporters in New Delhi after meeting India's Power Minister Rangarajan Kumaramangalam.
A joint venture between CLP Power International, a subsidiary of Hong Kong power supplier CLP Holdings Ltd , and its U.S. partner Cogentrix last week announced it had ceased development of the coal-fired power project.
The partners had said that seven years of efforts to develop the project, located in the coastal Mangalore region, had been thwarted by delays in obtaining required government approvals and agreements and in resolving public interest litigation.
``Today's verdict vindicates what we have said from the very beginning, that the allegations against us are frivolous and baseless,' the statement quoted MPC officials as saying.
``We are pleased that our names are finally cleared and that justice ultimately prevailed.'
DELAYED BY LITIGATION
Initiated in 1992 as one of eight fast-track power projects after India set off economic reforms and ended state monopoly on power generation, the project has been dogged by controversy.
Environmental groups objected to its location saying it would damage the local ecosystem of hills and forests along the country's western coast.
Provincial courts had ruled in favour of the project in an environmental litigation, but citizens' groups in 1997 filed another public interest litigation accusing the company of cost-padding, kickbacks and bribery.
The Karnataka High Court, which heard the case, had ordered an investigation into the allegations by the CBI.
The MPC challenged this ruling in the Supreme Court. The hearings on the case concluded in January and a judgment had until now been reserved.
HOPES OF PROJECT REVIVAL
The judgment raised the prospect of the project's revival.
Somers was quoted by the Sunday Times of India as saying the project could be revived if its backers' concerns were addressed.
He said the Karnataka chief minister had asked MPC to review its decision to withdraw and he had conveyed that to the backers.
Somers said on Monday he would also convey Kumaramangalam's request asking the boards of the two firms 'to review their decision in light of the Supreme Court's decision'.
Kumaramangalam said if revived, he would try to secure the financial guarantee from the federal government for the project.
``Once they inform us of their decision, I will move the proposal for the counter guarantee,' he told reporters.
The project requires guarantees, including one from Karnataka state government, before it can be implemented.
The guarantees had been withheld due to the delay in the Supreme Court judgement on the public interest litigation.
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