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Saturday, Jun 05, 2004

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Scrap Maheshwar power project, demands NBA

By Our Staff Correspondent

BHOPAL, JUNE 4. The Narmada Bachao Andolan has called for scrapping of the Maheshwar power project on Narmada citing the latest report of the Comptroller and Auditor General of India (CAG) in which the Power Finance Corporation (PFC) has been severely indicted for "irregular'' disbursement of loans amounting to nearly Rs. 100 crores to the S. Kumars-promoted Shree Maheshwar Hydel Power Corporation Limited.

The CAG report for the year ending March 2003 says that the PFC had acted without ensuring compliance to pre-disbursement conditions by S. Kumars as stipulated in the loan agreements. This has led to the PFC facing "the risk of potential loss of Rs. 99.32 crores, besides loss of interest amounting to Rs. 39.54 crores.'' One of the crucial conditions was that S. Kumars bring in their full share of equity, before the loans from the Indian public financial institutions were disbursed. The CAG report states that despite S. Kumars not bringing in their full share of equity, the PFC management disbursed around Rs. 100 crores to the Maheshwar project, disregarding the directions of its own Board.

According to the report, the borrower had started defaulting in payment of interest from October 2000 and did not pay interest amounting to Rs.39.54 crore till March 31, 2003.

The CAG report also refutes as unacceptable the PFC management's explanation that it had merely followed the same pre-disbursement conditions as that of IFCI, the lead financial institution of the consortium, and insists that the PFC "should have safeguarded its financial interest by ensuring compliance of the pre-disbursement conditions... in view of the reservations of its Board of Directors about the financial position of the promoter group as regards its capability to invest in equity.''

In a statement issued here, Narmada Bachao Andolan has emphasized that "the grave financial irregularities'' brought to light by CAG confirms and vindicates the concerns it has been raising consistently about the public financing of the privatised Maheshwar project.

NBA has asserted that this is not the first time that CAG has indicted public agencies for misuse of public money, waiver of norms and failure to collect dues in connection with S. Kumar's promoted Maheshwar project. The CAG reports of the years ending 1998 and 2000 had also noted that S. Kumars had not paid the State agencies -- MPEB (Madhya Pradesh Electricity Board) and the NVDA (Narmada Valley Development Authority) -- for the properties they had taken over from these agencies in 1992.

The NBA has drawn attention to the CAG report for the year ending 2000 in which it was pointed out that the MPSIDC (Madhya Pradesh State Industrial Development Corporation Limited) had extended a loan of Rs. 8.02 crores under irregular circumstances to the S. Kumars company-Induj Enertech and had violated the maximum allowable lending limit of Rs. 3 crores. Further, S. Kumars refused to pay back this money despite their having posted profits over those years. In September, 2001, the MPSIDC publicly declared the borrowing S. Kumars company, Induj Enertech Limited as a "wilful defaulter''.

The NBA leaders, Alok Agrawal and Chittaroopa Palit have asserted in their statement that without paying back the first loan taken from the MPSIDC, in 1999-2000, Induj Enertech obtained a second loan of Rs. 44.75 crores from MPSIDC for the Maheshwar project. When the Induj Enertech did not pay back even this loan, in September 2001, MPSIDC had issued a Revenue Recovery Certificate and instructed the District administration of Khargone to recover the outstanding amount from the attachment and sale of the movable and immovable properties of the Maheshwar project. In December 2002, the immovable properties including the dam site lands of the Maheshwar project were attached by the district administration. Since the entire outstanding amount on this loan is not recoverable from the immovable properties of the Maheshwar project alone, the MPSIDC has now issued further Revenue Recovery Certificates to make the recoveries from the properties of the directors of S. Kumars in Mumbai and Indore.

The NBA leaders have criticised the newly elected Madhya Pradesh Government for giving a State guarantee to the project on January 28 this year. The State guarantee was tagged with the condition that the Maheshwar project must obtain financial closure within 90 days. Since the time period has lapsed without the financial closure, the State guarantee extended to the project stands automatically cancelled, the NBA leaders have asserted.

NBA has demanded that the State Government and the Union Ministry of Power should scrap the "high cost, overcapitalized and destructive'' project. It has said that the decision needs to be taken to use this investment in reducing the huge transmission and distribution losses of the State, that is almost 45 per cent of the total electricity generated. This saving can make far more electricity available, than is slated to be produced by the Maheshwar project, at one-fourth the unit cost, and help in bridging the energy deficit in the State. The NBA has also urged the Central and the State Governments to come out with a white paper on the Maheshwar Project.

NBA has also urged the Reserve Bank of India and the Union Ministry of Finance to investigate the role of the financial institutions and banks involved in the Maheshwar project.

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Scrap Maheshwar power project, demands NBA