The Union Cabinet chaired by Prime Minister Narendra Modi recently approved key aspects of NHPC’s 1,000-MW Pakal Dul hydropower project in Jammu & Kashmir. These include:

* Investment for construction of the hydro project at an estimated cost of Rs. 8,112 crore, including interest during construction and financing charges of Rs. 501 crore. The approval also includes subordinate debt of Rs. 2,500 crore on the conditions and waivers of the Jammu & Kashmir government in a scheduled completion period of 66 months.

* Infusion of equity up to Rs. 1,605 crore by NHPC in Chenab Valley Power Projects Pvt. Ltd for construction of the 4×250 MW hydro project. The joint venture partners will arrange equity through their internal resources.

* Approval for initial investment in 660-MW Kiru and 560-MW Kwar hydropower projects.

* Ex-post facto approval for formation and incorporation of Chenab Valley Power Projects Pvt. Ltd, a joint venture between NHPC (49 per cent), Jammu and Kashmir State Development Corporation (49 per cent) and PTC (2 per cent).

* The J&K government has sanctioned exemption from work contract tax/entry tax and waiver of free power and water user charges for a period of 10 years from the completion of the project. The state government will purchase 49 per cent of power from the project while the remaining power will be allocated to the constituent states in the northern region, excluding Himachal Pradesh (which has refused to purchase power due to lower requirement).

The project Pakal Dul hydropower project is expected to reduce power shortage in the Northern Region, partly utilise the storage provisions of the Indus Water Treaty, and boost socioeconomic development in remote areas of Jammu & Kashmir.

The Cabinet also approved financial support to the National Export Insurance Account for overseas project exports by increasing the authorised corpus of the NEIA Trust to Rs. 4,000 crore with risk underwriting capacity up to 20 times of the actual corpus. This will increase the capacity of the NEIA Trust to underwrite more large-size projects in difficult countries with reasonably significant Indian content. The project exports would give sustained export earnings income of greater lifecycle durability and help create jobs for foreign exchange earnings. The budgetary support of Rs. 956 crore to NEIA will be augmented further.

NEIA was set up in 2006 as a public trust by the Ministry of Commerce and Industry to promote project exports from India. NEIA also supports project exports which have long credit periods for repayment and which are beyond the underwriting capacity of the Export Credit Guarantee Corporation.

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