Bhel may not buy equity in MP project

Bharat Heavy Electricals Ltd (Bhel) is unlikely to pick up equity in the 400-Mw Shri Maheshwar Hydel Power Project. However, the company's plan to supply equipment to the project is likely to face the Narmada Bachao Andolan's (NBA's) ire.

The Narmada Bachao Andolan has threatened to serve a legal notice to Bhel on the issue. The project is being constructed on the river Narmada in Mandleshwar (West Madhya Pradesh). Bhel is waiting for "an advance amount" to start work on "equipment supply".

Bhel (Bhopal unit) Executive Director R K Singh said: "I cannot say anything on equity but we are waiting for an advance so that we can start work on equipment. We are expecting the advance amount in a month or two."

Bhel will supply mainly Kaplan-type hydro turbines (10 units of 40 Mw each) to the project on a turn-key basis. The NBA is planning to protest against the Bhel supply. Earlier the activists had demonstrated against the company.

"We will serve them a legal notice in a day or two. Bhel is a public sector company. The project has gross financial irregularities and public money has been misused," Alok Agrawal, an NBA activist, told Business Standard.

Although the exact size of the deal is to be ascertained, the managing director of the Shri Maheshwar Hydel Power Project project, ML Gupta, had told Business Standard: "It (the amount) would be roughly around Rs 60 crore."

The Shri Maheshwar Hydel Power Project has reportedly achieved financial closure for the project. According to Gupta, IFCI and the MP government will have stakes.

Ever since the project began, it has been dogged with controversies on things like rehabilitation, financial irregularities (like inter-corporate deposits of a government arm) and economic viability.

However, according to Gupta, the project will generate power at Rs 3.30 per unit when it is completed by 2009. The project is also being funded by Hudco and Rural Electrification Corporation.

The "run-of-the-river" project will affect 22 villages. Of them 13 will be fully submerged, and nine partially submerged. It has been estimated that 9,459 families will be affected by the project.

So far, according to Gupta, people of one village have been rehabilitated and civil construction is on.