Within three months of department of financial services secretary Rajiv Takru having met bankers to review the progress of the much-delayed Shree Maheshwar Hydel Power Project, bankers are readying to give the project additional money. The project, which has been facing problems since 1998, has been classified as a non-performing asset (NPA) by all the lenders involved. Power Finance Corporation is the biggest lender to the project with an exposure of Rs 700 crore, followed by Rural Electrification Corporation (Rs 250 crore) and State Bank of India (Rs 200 crore).
Lenders, who have a cumulative exposure of Rs 2,200 crore to the Maheshwar project, are planning to infuse more funds and give the promoters more time to repay the loans. The additional money will be used to rehabilitate the locals and fund cost overruns, a banker with direct knowledge of the development said.
In mid-May, Takru had met senior bankers at the LIC headquarters in Mumbai to discuss how lenders could help revive the project. The meeting was part of an effort led by finance minister P Chidamabaram to jump-start 290 stalled projects.
The Maheshwar project, for instance, has been facing delay in commissioning due to opposition from the Narmada Bachao Andolan for several years.
After receiving permission from ministry of environment to resume construction in 2011, the project had been waiting for over a year for environment clearance to fill the reservoir in stages. In mid-2012, the ministry granted this approval.
Moreover, the elaborate rehabilitation plan had taken away considerable resources from the project, delaying it further. Under the rehabilitation plan, 18 new sites for about 8,900 families from 22 villages have been developed, media reports said. The Maheshwar project was conceptualised by the Narmada Water Dispute Tribunal, formulated by the Madhya Pradesh State Electricity Board in 1983 and approved by the Central Electricity Authority and the Central Water Commission.
The 400 MW private sector hydel project on the Narmada in Madhya Pradesh is promoted by MW Corporation, led by Mukul and Warij Kasliwal. As per the company’s website, the project will reduce the peak power shortage in Madhya Pradesh by over 25% as well as improve the socio-economic condition of the region.
The 290 stalled projects that the finance minister wants up and running envisage an outlay of Rs 12 lakh crore with banks having sanctioned Rs 4.8 lakh crore and disbursements at half that level.
Much of this has to do with the fact that in most instances, clearances for environment and land haven?t come through, while in some cases fuel linkages need to be tied up. Bankers, asked to take stock of these projects, say it could be a while before they?re back on track, adding that more money will be disbursed only once all clearances are in place.
?Most projects are held up for want of clearances, in many cases more than one permission is pending,? said Bank of Baroda CMD SS Mundra.
IDBI Bank CMD MS Raghavan pointed out: ?It will take at least two to three months before these stalled projects get back on track because in some cases coal linkages are not proper while in others environmental clearances haven?t come through. Promoters are pursuing the necessary permissions.?