Rs 1,270 crore writedown on tardy projects singes NHPC

Tags: Companies
Public sector hydroelectric power company NHPC has written down Rs 1,270 crore expenses owing to delays in the construction of the 2,000 mw Subansiri (Arunachal Pradesh), Parbati-II (Himachal Pradesh) projects and the Teesta low dam (West Bengal).

This was revealed at a time the government was readying to divest 11 per cent stake in the company to mobilise at least Rs 3,000 crore. The NHPC board of directors is scheduled to take up the writedown on July 7.

The company could not capitalise the expenses incurred on establishment and interest outgo of these under-development projects as no asset was created. Accordingly, the auditors disallowed capitalising the deployed funds, which were instead treated as revenue expenses.

This made NHPC post a Rs 707.40 crore quarterly loss for first time for the January-March period. For the whole of 2013-14, the company’s net profit got halved at Rs 1,000 crore.

“In a project under construction, the expenses get capitalised on creation of assets. Since no assets were created after deploying Rs 1,000 crore towards establishment and incurring interest expenses, the statutory auditors have disallowed capitalising the funds,” said a top NHPC official, who did not want to be identified.

He said nothing moved in these projects for over a year and even a court order went in favour of the vendors and also set aside the recommendations of an expert panel under former power secretary RV Shahi.

Power ministry officials are miffed at the NHPC management for being “indecisive on resolving disputes with project contractors” that led to the delay in Subansiri and Teesta low-dam projects.

When contacted, NHPC chairman and managing director RST Sai refused to comment on the issue. Sai assumed charge as NHPC chairman on June 8. Power secretary Umashankar was not available for comment.

NHPC has not begun any new project in the last five years. Barring the 160 mw low-dam project on Teesta river, which was to be commissioned next year, the company has no new project in the pipeline to improve its revenue stream. The 330 mw Kishanganga, 800 mw Parbati – 11 and 2000 mw Subansiri projects would not get completed before 2017-18.

The power ministry is worried that over 47 per cent of NHPC assets are non-productive and under construction. About 2,800 mw worth of projects are under construction and continue to face delays in clearance from different ministries, including that of environment and forests.

Prime minister Narendra Modi is scheduled to dedicate NHPC’s Uri-II power project on Jhelum river in Baramulla district to the nation on July 4. Uri-II, a 240 mw hydroelectric project on the Indo-Pak border, was completed three months back with an investment of Rs 2,100 crore. The Uri-I hydroelectric power project near Uri has a capacity of 480 Mw.

badarinath@mydigitalfc.com

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