NTPC to be compensated

NTPC committed around Rs 2,000 crore on the Loharinag Pala power project, which has been rendered futile on account of the project being scrapped. Now the government is planning to compensate NTPC for the Rs 650 crore loss it will suffer due to the scrapping of this project:

In a rare case, the government is considering to compensate public sector NTPC for the Rs 650 crore loss it will suffer due to the scrapping of the hydro power project at Loharinag Pala in Uttarakhand by the centre.

"We have to prepare a proposal for the approval of the cabinet for compensating NTPC," Power Minister Sushilkumar Shinde told reporters at an ICC Energy Summit. He further said the ministry has been assured that all the expenditure incurred by the company on the project would be compensated. NTPC is estimated to have committed around Rs 2,000 crore on the project, which has been rendered futile on account of the project being scrapped. Country's largest power generating company NTPC saw a 16 per cent dip in its net profit at Rs 1,841.89 crore for the first quarter ended June, 2010 over the same three-month long period last year.

Admitting that NTPC has already spent around Rs 650 crore on the project, Shinde said, "The entire expenditure after taking into account the already placed orders and other running expenses would come to around Rs 2,000 crore."

On Friday last week, a Group of Ministers (GoM) had decided to scrap the hydel project on the Bhagirathi river in view of religious sentiments and environmental concerns. Headed by Finance Minister Pranab Mukherjee, the GoM did an in-depth review of the project and recommended that the hydro-power dam, work on which had been suspended for some time, should be scrapped.

Two other projects on the Bhagirathi river -- the 480-MW Pala Maneri and 381-MW Bhairon Ghati hydel projects -- proposed by the state government have already been scrapped by the GoM. However, not much work was done on these projects. The decision to scrap Loharinag Pala project was taken a few days after enviornment minister Jairam Ramesh had said in Parliament that the projects where bulk of the work was completed could not be stopped on environment concerns. Steps could only be taken mitigate the risks.