Power Finance Corporation to Fund 225 MW Hydro Project in Madhya Pradesh

The state government has already conducted the pre-feasibility study of these projects


Government-owned Power Finance Corporation (PFC), a non-banking finance company (NBFC), has signed a memorandum of understanding (MoU) with Narmada Basin Projects Company Ltd (NBPCL) to fund 225 MW of hydroelectric project and 12 multipurpose projects in the state of Madhya Pradesh.

According to the press statement released by the Ministry of Power, the projects are worth ₹220 billion (~$2.9 billion) and will be deployed by NBPCL in the state of Madhya Pradesh. The agreement was signed on a virtual platform by the senior officials of PFC and NBPCL.

The state government has conducted the pre-feasibility study of these projects and has provided approval for their execution. The disbursal of the amount will be linked with the execution of the projects, it added.

Some of the major multipurpose projects that will be financed under the MoU are Basaniya Multipurpose Project Dindori, Chinki Boras Multipurpose Project, Narsinghpur Raisen Hoshangabad, Sakkar Pench Link Narsinghpur Chhindwara, and Dudhi Project Chhindwara Hoshangabad.

A multipurpose project fulfills and integrates a variety of purposes at the same time, like power generation, irrigation, and soil conservation.

The release also noted that the PFC would consider the financial assistance to NBPCL based on due diligence and mutually acceptable terms.

Last year in January, the Madhya Pradesh Electricity Regulatory Commission (MPERC) had issued a tariff order for the procurement of power from small hydropower projects in the state.

The MPERC had decided to use a common tariff for all the small hydropower projects using common benchmarks. The commission had fixed the capital cost at ₹65 million (~$0.9 million)/MW for the projects of capacity below 5 MW and ₹63.5 million (~$0.9 million)/MW for the projects of the capacity of 5 MW and above.

Last year, the Government of Assam and the National Hydro Power Corporation also signed an MoU to develop Subansiri lower hydroelectric project located along the borders of Assam and Arunachal Pradesh with a capacity of 2 GW.

In January 2020, a panel that reviewed the Indian Electricity Grid Code (IEGC) 2020, suggested that hydro, wind, solar and wind-solar hybrid projects, must be treated as a ‘must-run’ power projects.