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LATEST NEWS UPDATES | Maheshwar dam power cost put at Rs. 10 a unit by Gargi Parsai

Maheshwar dam power cost put at Rs. 10 a unit by Gargi Parsai

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published Published on Feb 5, 2012   modified Modified on Feb 5, 2012

The worst fears of the Madhya Pradesh unit of the Narmada Bachao Andolan (NBA), have come true with regard to the high per unit cost of power to be produced by the controversial privately-owned Maheshwar hydro project in Madhya Pradesh: Information revealed through an RTI application shows that the private company developing the dam has projected the average cost of electricity to be produced at a whopping Rs. 10 per unit. In the first year it is projected at the unaffordable rate of Rs. 10.78 paise per unit.

“This vindicates our criticism about the unviability of the project and that there is no justification and public interest in uprooting 10,000 families living in 61 villages who are yet to be resettled and rehabilitated,” NBA members Alok Agarwal and Chittaroopa Palit told journalists at a press conference here on Thursday.

Power purchase pact

With the average per unit cost of electricity at Rs. 2.44 paise a unit in the State, this means that the State government will subsidise the private company and bring huge losses to the State exchequer. Under a Power Purchase Agreement valid for 35 years, the State government had agreed to pay upfront an agreed cost of power to the company. The State had committed to a levellised tariff of Rs. 5.24 paise a unit, on the condition that efforts would be made to bring it down further.

Yet, the minutes of a meeting held in the Union Power Ministry on November 25, 2011, disclose that the M.P. government representative had rued that in the last six years the cost of the project had shot up from Rs. 2800 crore to Rs. 4000 crore resulting in a jump in the levellised tariff from about Rs. 5 to about Rs. 9 a unit.

No letter of comfort

The minutes of the meeting made available by the NBA to The Hindu reveal that although financial institutions were keen that the M.P. government purchase the high-priced power, the State has not provided a “letter of comfort” (expressing willingness to buy such expensive power) indicating that it was reluctant to buy power at such a high cost.

“Any decision of the State government to purchase power at such a high cost would be suicidal as it would mean providing a subsidy of over Rs. 21000 crore to the company,” the activists pointed out.

The 400 MW Maheshwar power project is being built on Narmada River in Khargone district. Initially, it was a State government project but privatised in 1992 and handed over to S. Kumar group of companies.

Charging the State and Central government, with acting “against public interest” by getting the Power Finance Corporation and other public financial institutions to invest crore of rupees in the project, the NBA demanded that the M.P. government scrap all pacts with the company including the Power Purchase Agreement and not give in to pressure for buying such expensive power, which will ultimately burden the consumers.

The Andolan also called upon financial institutions and banks not to infuse further funds into the project.Demanding a Central Bureau of Investigation probe into alleged financial irregularities, senior lawyer Prashant Bhushan said the project should be disbanded.

The Hindu, 5 February, 2012, http://www.thehindu.com/todays-paper/tp-national/article2862129.ece


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