Investment approval for construction of Pakal Dul Hydroelectric Project; Infusion of equity beyond Rs. 500 crore by NHPC in M/s. CVPPL and ex-post facto approval for formation and incorporation of M/s. Chenab Valley Power Projects Private Limited

No: ----- Dated: Sep, 10 2014

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for the following:-

1. Investment approval for construction of the Pakal Dul Hydroelectric Project (4 x 250 Megawatt (MW) at an estimated cost of Rs.8112.12 crore including Interest During Construction (IDC) and Financing Charges (FC) of Rs. 500.76 crore at March, 2013 price level with a debt equity ratio of 70:30. The approval also includes subordinate debt of Rs. 2500 crore on the conditions and waivers of the Government of Jammu and Kashmir in a scheduled completion period of 66 months.

2. Infusion of equity upto Rs. 1605 crore by NHPC in M/s. Chenab Valley Power Projects Private Limited (CVPPL) for construction of the Pakal Dul (1000 MW) and for initial investment in Kiru (660 MW) and Kwar (560 MW) hydro electric projects.

3. Ex-post facto approval for formation and incorporation of M/s. CVPPL, a Joint Venture between NHPC (49 percent), Jammu and Kashmir State Development Corporation (JKSPDC) (49 percent) and PTC (2 percent).

The Joint Venture partners will arrange equity by their internal resources. The Government of Jammu and Kashmir has sanctioned exemption from Work Contract Tax (WCT)/entry tax and waiver of free power and water user charges for a period of ten years from the completion of the project. The Government of Jammu and Kashmir shall purchase 49 percent of power from the project. The remaining power will be allocated to the constituent States in the Northern Region excluding Himachal Pradesh (which has refused to purchase power due to less requirement) with the guidelines for allocation of power from Central Hydro Generating Stations. The project would help in reducing the power shortage in the Northern Region and partly to utilize storage provisions of the Indus Water Treaty. It would also help in the socio-economic upliftment of remote areas of Jammu and Kashmir.