World Bank halts $437-mn NJPC loan

ANUPAMA AIRY

NEW DELHI, DECEMBER 18: The World Bank has decided to terminate the $437 million loan to the state-owned Nathpa Jhakri Hydro-Electric Power Corporation (NJPC) midway thereby putting a questionmark on the future of the 1,500 MW hydel project being executed by the company in Himachal Pradesh.

Top government officials said that in a recent letter to the ministries of finance and power, the World Bank’s Country Director, Edwin R Lim has announced the Bank’s decision to pull out of the project.

“Even as three units of this project are due to commission in 2003, the World Bank has refused to consider any further extension of its loan, which is due to close in March 2002. The Bank has in fact asked NJPC and the centre to secure alternative funding for competition of this mega project”, officials said.

Official sources said that nearly $100 million is yet to be disbursed from the World Bank loan funds, for which NJPC will now have to look for alternate sources of funds.

It is significant to note here that the World Bank has already extended this loan once for four and a half years from its earlier closing date of December 1997. This loan was given 12 years back and is oldest in the World Bank portfolio of active loans.

On being contacted, chairman and managing director, National Hydro-electric Power Corporation (NHPC), Yogendra Prasad, who was given additional charge of CMD, NJPC few months back, said, “I do not share the view that suspension of the World Bank loan will in anyway jeopardise the progress of the project. As far as alternative sources of funds is concerned, I have already tied up the balance $100 million with Power Finance Corporation (PFC) which has agreed in principle to extend the balance funds requirement for the project”.

Interestingly, World Bank’s decision to discontinue this loan comes close on heels of the recommendations made by the Bank’s own progress review mission, in its aide memoir, where it has been recorded that good progress has been achieved in the construction of the project during the last three months and that the first two units will be commissioned at the end of 2002, which is 12 months in advance of the date envisaged in April 2001.

Showing its confidence on the progress achieved by NJPC in the past three months, World Bank has, in fact, improved the project rating from ‘marginally satisfactory’ in May earlier this year to ‘fully satisfactory’ during the last month.

NJPC is a 75:25 joint venture of the Union Government and Himachal Pradesh respectively.