To fund hydel project, NHPC proposed its forest land assets as collateral, Govt said no (Environment Ministry red-flagged move; project on Arunachal-Assam border faces 300% cost escalation), Pg1

Key Highlights:

• The Environment Ministry rejected NHPC's request to use forest land assets as collateral for raising funds for the Subansiri Lower hydel project.
• The Subansiri Lower Hydroelectric Project, located on the Arunachal Pradesh-Assam border, has faced a cost escalation of over 300%.
• The project's cost has increased from Rs 6,285 crores in 2002 to approximately Rs 26,000 crores currently.
• NHPC has been approved to raise debt up to Rs 10,000 crore through various financial instruments.
• The first four units of the 2000-MW Subansiri Lower HEP are expected to be operational this month, with the final four units scheduled for connection during 2026-27.

Detailed Insights:

• NHPC sought an NOC to use assets on forest land as collateral to raise funds for the Subansiri Lower Hydroelectric Project.
• The Environment Ministry clarified that mortgaging forest land for financial gain is not permissible under the Van (Sanrakshan Evam Samvardhan) Adhiniyam, 1980.
• The ministry emphasized that the ownership of diverted forest land remains with the forest department, and it cannot be used for purposes beyond the original project proposal.
• The Subansiri Lower HEP faced delays between 2011 and 2019 due to local resistance and court cases regarding dam safety and ecological impact.
• The cost escalation is attributed to the extended construction period, escalation charges, and interest during construction.
• One of the project’s eight 250-MW units has been successfully synchronized with the national power grid.

Key Concepts Involved:

• NOC (No Objection Certificate): A legal document issued by an authority, allowing an individual or entity to proceed with a specific project or activity.
• Collateral: An asset pledged as security for a loan, which the lender can seize if the borrower defaults.
• Van (Sanrakshan Evam Samvardhan) Adhiniyam, 1980: Indian legislation that regulates the diversion of forest land for non-forestry purposes.