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| J&K CM requests PM for additional funds | | Baglihar project facing severe financial crunch | | BL KAK
NEW DELHI FEB 14
Even as both the Centre and Jammu and Kashmir government are keen on ensuring unhindered work on the construction of the Baglihar hydro-electric project before the year 2007 runs out, a piquant situation has arisen with the prestigious project reported to be facing a severe financial crunch. The project's executing agencies have hailed the World Bank neutral expert's "favourable" verdict. But the financial crunch has led the State administration to seek "early" help from the Centre.
The Jammu and Kashmir Chief Minister, Ghulam Nabi Azad, who has apprised the Centre of the actual position in relation to the Baglihar project, is planning to meet the Prime Minister, Manmohan Singh, to make the government of India release additional funds to ensure hassle-free completion of the hydro-electric project. More worrying is that the rising costs are affecting unit generation costs. Calculations suggest a high tariff of Rs. 3.33 per unit in 2008, thus making it less competitive.
No wonder, the J&K government headed by Ghulam Nabi Azad is now planning to approach New Delhi for additional funds. Prime Minister, Manmohan Singh, has already contributed Rs 6.30 billion to the project as part of his special reconstruction plan for Jammu and Kashmir. The State government managed the financial closure of the Baglihar project in 2004 at an investment of Rs 40 billion.
The J&K Powser Minister, Rigzin Jora, told the State Legislature recently that the government had so far spent Rs 32.74 billion on the project, excluding the cost of bonds raised earlier. These bonds, to the tune of Rs 5.08 billion, must be repaid by December 2007. While the State government has provided Rs 17.7 billion, the Power Development Corporation, the executing authority, has taken a Rs 11.31 billion loan from the Indian Bank Association.
According to some experts, Baglihar has no chance of producing returns. The project cost, originally estimated at Rs 35.95 billion in 1998, has skyrocketed to Rs 50 billion, according to calculations made in October 2006. Since the project will take at least another year to start generation, experts put the total cost somewhere near Rs 60 billion. It is pointed out that a singly day’s delay would mean a loss of Rs 20 million to the exchequer. Officials of the J&K government admit that the additional costs are worrying.
Banks may not finance the additional sum as they have already made it a part of the agreement that if the costs go up beyond Rs 40 billion, it has to be borne by the Jammu and Kashmir government. Cash-starved government in the State has no choice but to depend on the financial support from New Delhi.
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