All hopes lost to revive Bakreswar plant

KOLKATA: The erstwhile government had lost the opportunity to set up the sixth 600-megawatt thermal power unit at Bakreswar. And now, the Mamata Banerjee government has lost all hopes of reviving it.
The last-ditch effort by West Bengal State Electricity Development Corporation Ltd to revive the project has ended on a negative note. A review meeting was held last week to win back Japan International Cooperation Agency's (Jica) funds for the sixth (600 MW) thermal power unit at Bakreswar.Since the state's revenue deficit has hit rock-bottom, there was no way officials could prepare a report to win back the project. Even earlier, the project was rejected on grounds of the state's poor financial health and its inability to repay debt.
"The fiscal situation has hit a dismal all-time low. There seems to be no way the crisis can be abated in near future. The state's debt serviceability ratio has deteriorated further. There is no way the Bengal government can fight to win back the project," said a source.
Thanks to the apathy of the previous government, the new government has been left with a situation where the state will have a 5,133-MW power shortage by 2015-2016 and must desperately look to augment generation of electricity.
Already, there is a standoff between the government and NTPC over land for the 1,600-MW thermal power project at Katwa in Burdwan. The latter insisted for at least 1,000 acres for the Rs 9,600-crore supercritical (more than 650 MW) plant. But the power utility major was asked to set up the plant on half of that land.
Under the circumstances, the government reopened the files for the Bakreswar project because the loan offered was lucrative (85:15) and the government would need to contribute a meager 15% of the cost. The interest payable was supposed to be as low as 4.5% -- and the loan was repayable over 25 to 30 years.
Jica had funded five units (210 MW each) at Bakreswar. So when the proposal for the sixth unit was placed before them, they were keen to fund it. But in July 2010, the department of expenditure (DoE) under the Union finance ministry communicated to the erstwhile government that the state's debt serviceability ratio was so poor that the project couldn't be given a go-ahead.
The DoE pushes projects for aid from the World Bank, the Asian Development Bank, Jica and the likes. "If we could win back the project, the state would not have to depend on Centre alone for development projects or generate its own funds," said an official.
A government's debt serviceability ratio depends on how much liquidity the government has to repay debt. Bengal's inability to meet debt obligations and its record in debt repayment is depressing, even when compared to states like Orissa and Bihar.