PGCIL to cough up Rs 600cr as World Bank walks out

The project had envisaged linking Talcher in Orissa to Kolar in Bangalore with a transmission system so that surplus power from the eastern region could be transported to the south. The centre has asked PGCIL not only to refund the entire tax benefits to the project but has also slapped penal interest of 24 per cent after withdrawing deemed export status to its mega transmission project.

World Bank has refused to fund the PowerGrid project due to post-Pokharan sanctions followed by National Thermal Power Corporation’s (NTPC) inability to comply with environmental norms of the Bank.

Speaking to mediapersons visiting Kolar, PowerGrid Chairman R P Singh said that ‘the Corporation will have to pay about Rs 600 crore to the government as we are not getting the loan from the World Bank.’ R P Singh said that the corporation would commence power transmission on the Talcher—Kolar grid by August 31, within 27 months of commencing work on the site.

‘‘If we had not taken up the project and waited for World Bank finance, the time and cost overruns would have escalated. Right now we may be saving some money, against the approved cost of Rs 3,865 crore, the project would be completed at just about Rs 2,650 crore and even after paying the government about Rs 600 crore in lieu of tax benefits, the total cost would be just Rs 3,250 crore,’’ Singh explained.

He said the corporation would seek waiver of penal interest as it would only add to the overall costs which would lead to higher tariff for cash-starved SEBs of states in the southern region. World bank had sanctioned the loan worth $ 475 million in May 1998.

The correspondent visited PowerGrid’s Kolar station at the invitation of the company