Narmada Hydroelectric Development Corporation (NHDC), a subsidiary of MP government and National Hydroelectric Power Corporation (NHPC), is unlikely to chip in any funds into the controversial Shree Maheshwar Hydel Power Project.
Union ministry of power is learnt to have asked the NHDC to chip in at least Rs 700 crore in promoter’s equity in the 400 Mw project.
If highly placed sources are to be believed, two meetings have already taken in this regard in New Delhi. NHDC has been asked to give a reply by 10 February.
“The matter was discussed in NHPC’s board meet,” a highly placed source who has direct knowledge of the development told Business Standard. On any decision in this regard, the source clarified, “Who will invest in an unviable project.”
Top officials of NHDC and other government officials are tight-lipped about the issue. A senior official, however, clarified that only State government and NHPC jointly can decide on the matter. They will also have to consider the big issue of resettlement and rehabilitation. NHDC can take over the project, it would be an easier option, the source said.
Reacting to the probable development, Narmada Bachao Andolan (NBA), which has been demanding that the project be dumped, has strongly objected to the move.
“The Union Ministry of Power had already said two years back that power generated through this project would not be less than Rs 11 per unit, if it comes to shape the domestic power tariff from the project would go up to Rs 15-17 per unit, who will buy the costly power? Also the state will have to follow recent Supreme Court ruling in resettlement and rehabilitation, as a result the project cost would escalate by another Rs 1,000 crore. Also, entire debt of the project has been declared NPA (non-performing asset) by Reserve Bank of India. If Union government is taking any such decision it would be wastage of public money,” Alok Agrawal, chief activist Narmada Bachao Andolan told Business Standard.
According to the source, a meeting took place on 13 January and later on 20th January in which NHDC was asked to chip in Rs 700 crore as contribution to the promoter’s equity, which has widened due to cost escalation.
Earlier, BHEL had also been asked to chip in but the ‘Navaratna’ company refused since payment against three machines (40×3 MW turbines) which it had supplied to the project is still pending.
“The cost has now gone up to Rs 5,600-6,000 crore and now there is another fund gap which is why they (Union government) want some public sector undertaking to chip in funds,” the source said adding, “If NHDC refuses they will go to some other PSU.”
Power Finance Corporation is the biggest lender and all lenders have cumulative exposure of Rs 2,200 crore to the project. “There are plans to infuse more funds and give the promoters more time,” the source said.
The 400 MW run-of-the-river project originally came into picture in 1993 when its projected cost was Rs 1,653 crore and power tariff pegged at Rs 2.64 per unit. Later it slipped into controversies and PFC came to extend financial support. A consortium of PFC (Rs 700 crore), HUDCO (Rs 250 crore), Central Bank of India (Rs 180 crore), State Bank of India (Rs 200 crore), Life Insurance Corporation of India (Rs 106 crore), IDBI (Rs 30 crore), Dena Bank (Rs 41 crore), Rural Electrification Corporation (Rs 250 crore) and IFCI (Rs 41 crore) was formed to provide loan to the project.
“So far approximately Rs 3,000 crore had been invested in the project but nothing has come off it,” Agrawal said.
NHDC has developed two projects – 1,000 Mw Indira Sagar project and 520 Mw Omkareshwar project – on Narmada river in western Madhya Pradesh in Khandwa district. The Maheshwar power project is a downstream project of Omkareshwar project.