Efforts to carry out financial restructuring of the much-delayed 400 MW Maheshwar hydel project in MP have received a boost with the promoters showing willingness to infuse fresh funds and main lender Power Finance Corporation (PFC) softening its stand.
“SMHPCL (Shree Maheshwar Hydel Power Corporation Ltd) has submitted a firm proposal to PFC to infuse equity and debt into the Maheshwar hydro electric project,” the MP energy department has said in a letter to the Union power ministry dated August 25.
The letter has reiterated the MP government’s commitment to purchase power at a maximum cap of Rs 5.32 per unit for the entire duration of the project.
A committee formed under state additional chief secretary (finance) Ajay Nath has been carrying out negotiations with the promoters and lenders to find a solution to the impasse.
The committee has outlined three options – infusion of additional funds by promoters, taking over of the entire project by a public utility or cancellation of the power purchase agreement (PPA). The first option is largely dependent on PFC and other lenders agreeing to the financial restructuring plan.
“As no public utility is interested in taking over the Maheshwar hydel project, PFC is now ready to consider the option one. The promoters have given a letter of comfort from international investors for US $150 million to PFC,” official sources said. “The financial restructuring plan will be discussed in next meeting, the date of which has not been fixed,”
According to the Central Electricity Authority (CEA), the Maheshwar hydel project has been delayed by 14 years due to cash flow issues and inability to pay for the rehabilitation of people affected by the project.
The project, originally estimated to cost Rs 1,569 crore, has now been estimated at Rs 4,700 crore – a 200% cost overrun. However, sources say the actual cost has touched Rs 6,000 crore. The lenders, led by PFC, have a total exposure of more than Rs 2,500 crore in the project.
Prolonged delay in commissioning of the project has also raised the projected power tariff. Meanwhile, the state government has made its position amply clear.
“We have agreed to buy the power subject to maximum cap of Rs 5.32 per unit, and will not renegotiate a higher rate,” MP Power Management Company chief general manager RD Saxena said.