Tripura insurgency scares Japan off power project

Vol 6, PW 19 (20 Nov 02) People & Policy

UNCERTAINTY HANGS OVER a proposed 500-MW gas and coal-based power station planned for insurgency-hit Tripura following a decision by the Japanese Bank of International Cooperation to withdraw support.

We understand JBIC has written to the power ministry in Delhi that it is, "no longer in a position to fund the project in view of the insecure conditions prevailing in the state." The Rs1, 800cr ($375m) Shantinagar power project - the biggest in India's northeast - is backed by state-owned Northeast Electric Power Corporation with a debt equity ratio of 80:20. NEEPCO and the Tripura state government are set to take a 10% stake each in the project.

JBIC was the sole lender. It was hoped that 90% of the feedstock to fire the plant would come from the ample gas reserves lying unexploited in the thick forests of Tripura.

State power minister Badal Choudhury tells this report JBIC might have pulled out for other reasons, using law and order as an excuse. "They have funded projects in Assam where the law and order situation is worse," he said.

Tripura remains hopeful it can tempt back JBIC. The state's most senior bureaucrat, chief secretary Venkatesh Thulsidas has invited JBIC to send a team to, "assess the law and order" situation.

Tripura's eagerness to retain JBIC is understandable. The Japanese bank agreed to lend at 2% per annum against a 5% rate proposed by Deutsche Bank.

If the Shantinagar power project happens, Tripura, with a peak demand of just 175-MW, will have more electricity than it needs, and could sell power to the national electricity grid.

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