NHPC Seeks Multilateral Funds for Tawang Hydroelectric Projects

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Researched by Industrial Info Resources India (New Delhi, India)--India's state-owned hydropower major NHPC Limited (BSE:533098) (Faridabad, Haryana) has sought approval from the government of India to acquire funds from multilateral and bilateral funding agencies to finance its two hydroelectric projects, Tawang I and Tawang II, which are proposed for execution in the northeast Indian state of Arunachal Pradesh.

According to NHPC, the total financial outlay for the two projects with an aggregate 1,400-megawatt (MW) capacity, stands at $2.02 billion. NHPC seeks to raise the debt component of the investment, which is about $1.41 billion, for foreign funding agencies.

NHPC already has acquired environmental clearance for the two projects. Implementation of the two hydroelectric projects, however, has been stalled because of pending forest clearances from India's Ministry of Environment and Forests. The ministry has not yet conceded to accord its nod for the diversion of forest land required for the construction of the two hydroelectric projects, which are proposed to be developed on the Tawangchu River in the state.

In a recent missive to the Ministry of Power, NHPC has stated that funding agencies such as Japan International Cooperation Agency (Tokyo, Japan), KfW Bankengruppe (Frankfurt, Germany), Asian Development Bank (Manila, Philippines) and the World Bank (Washington, D.C.) provide long-term loans for projects at low interest rates, which helps the project owners to keep the tariffs low and provides liquidity to the company for further investments. To shore up its case, the hydel-major has asserted that it has not availed any foreign currency funding since 2004, and the two projects have acquired both techno-economic clearance and environmental clearance.

The two hydroelectric projects are planned to be developed near Jang village, in the Tawang district of Arunachal Pradesh. The 800-MW Tawang II would be developed 700 meters downstream from the 600-MW Tawang I project. Tawang I has a planned construction period of 78 months, while Tawang II is scheduled to be completed within 83 months.

With an installed generation capacity of 5,526 MW, NHPC is India's largest hydropower utility. The company is currently pursuing clearances from the government of India for several hydropower projects with an aggregate capacity of 9,651 MW. Of these, seven projects (with an aggregate capacity of 5,965 MW) are planned to be implemented by NHPC on its own, while other projects are planned for execution through joint ventures.

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