Maheshwar hydel project: NGT order setback for financial restructuring

Efforts to carry out financial restructuring of the much-delayed 400 MW Shree Maheshwar hydel project on the Narmada river received a major setback after the recent National Green Tribunal (NGT) order.

The NGT has directed the government that the gates of the Maheshwar dam cannot be closed and the dam cannot be filled until rehabilitation and resettlement of the people affected by the project is completed.

A consortium of lenders led by Power Finance Corporation (PFC), Hudco and several state-owned banks has infused more than Rs 2,000 crore in the project. “The lenders had met recently where PFC had hardened its stance. The recent NGT ruling is more bad news,” said a state government official, requesting anonymity.

HT accessed the minutes of the meeting of lenders held recently that revealed that both sides have failed to reach common ground. The minutes state that “no firm and binding proposal is made available for the entire funding requirement of Rs 1,700 crore. (There is) no clarity on payment of outstanding interest over dues. Proposal (by promoters) doesn’t indicate how the desired tariff of Rs 5.32 will be achieved to enable lenders to decide on the proposal, including the extent and implication of restructuring if any.”

Even as the PFC has indicated that the project should be taken over by a public sector unit, no company is ready to take on the project. “The main problem is relief and rehabilitation work. The project would require at least Rs 2,000 crore capital infusion, half of which would go to rehabilitation,” a National Hydroelectric Power Corporation (NHPC) official said on condition of anonymity.

According to the Central Electricity Authority, the project has been delayed by 14 years due to cash flow issues and the inability to pay project-affected people for rehabilitation. The project, originally estimated to cost Rs 1,569 crore, has now been estimated at Rs 4,700 crore - a 200% cost overrun. However, company officials say the actual project cost has touched Rs 6,000 crore.