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DAM-L LS: Will spiralling costs sink SSP? (fwd)
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Date: Wed, 5 Dec 2001 10:05:33 -0800 (PST)
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Subject: LS: Will spiralling costs sink SSP?
http: //www.thehindubusinessline.com/stories/040520mi.htm
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Will spiralling costs sink SSP?
Vinod Mathew
IT MAY not need a Medha Patkar or
Arundhati Roy to spoil the party for the
ambitious Sardar Sarovar Project (SSP) long
heralded as Gujarats life line. On the
contrary, they may be doing the Gujarat
government, whose financial stake is far
higher than the other States participating in
the Narmada project, a great service by
keeping up the anti-dam propaganda.
Sacrilegious it may sound to hardliners on
both sides of the Narmada divide, it is the
anti-Narmada activity that is giving the SSP
a breather, though it may be hard put to
find a viable solution for its mounting
financial woes in the coming days.
Thus, if the SSP was allowed to proceed
unhindered towards the 138-metre pinnacle,
the total project cost requirement would be
over Rs 20,000 crore in the next couple of
years. The amount spent so far is Rs 11,820
crore.
The cost of the Narmada project, Rs 6,406
crore in 1986-87, has breached quite a few
revised barriers ever since. Though the cost
estimation never budged for a decade,
1996-97 saw the figure revised to Rs 13,000
crore. On the costing front, the last couple
of years have seen frenetic activity. The
project size moved from Rs 18,000 crore to
Rs 24,000 crore, before settling at Rs 30,000
crore as is being admitted by the Sardar
Sarovar Narmada Nigam Ltd (SSNNL) brass.
SSNNL-watchers are convinced there will be
more revised cost estimates in the days to
come. It is their opinion that the realistic
project cost will then be over Rs 40,000
crore. Finally, all this financial jugglery is
bound to hurt Gujarat, arguably the projects
biggest beneficiary.
Consider the financial burden the SSP will
pose for Gujarat as per the cost-sharing
formula devised by the SSNNL. Gujarat has
to bear 50.56 per cent of the dam
construction cost. The canal system,
including the distribution system, accounts
for 89 per cent. It gets off easy only on
power generation, where its share has been
kept at 16 per cent.
The revised project cost estimates over the
years, based on an approximated price
escalation at the micro-level, suggest that
the dam component would account for 16
per cent of the entire project size, the share
of the main canal would be 25 per cent, the
distribution system 44 per cent and power
generation 15 per cent.
According to State Government sources, the
SSNNL spent Rs 11,820 crore on the
prestigious project as of last month. This
comprises Rs 2,083 crore which has been
the expenditure incurred on the dam, Rs
3,351 crore on the main canal, Rs 2,651
crore on the distribution system and Rs
1,146 crore on the power plants being built
at the dam site in Kevadia.
The project cost, estimated at Rs 13,000
crore in 1996-97, put the cost of dam
construction at Rs 2,080 crore, the main
canal at Rs 3,230 crore, the distribution
system at Rs 5,720 crore and power
generation at Rs 1,950 crore. The total cost
of the canal network by the current
estimates, would be Rs 5,075 crore and that
on the distribution system would be over Rs
5,850 crore.
The cost of the SSP as per the 1986-87
estimates, was pegged at Rs 6,406 crore.
This constituted Rs 1,019.45 crore towards
dam construction, while the share of the
main canal was Rs 1,588.54 crore,
distribution network Rs 2,818.10 crore and
Rs 979.95 crore earmarked for power
generation.
Not surprisingly, the Gujarat Government has
been not too forthcoming with the
nitty-gritty on the cash to be generated if
the mega project were to achieve financial
closure in the next couple of years.
Especially so as the SSNNL has been caught
in a bind over the Supreme Court directive
that requires it to receive the Narmada
Control Authoritys (NCA) nod for the
construction of every 10 metres of dam pari
passu with the rehabilitation of those
affected by the project.
As per the current schedule, the dam
height, which has been stuck at 90 metres
for the last one year, can go up to 100
metres by June 2002. However, if that were
to happen, as many as 850 families in
Madhya Pradesh would have to be relocated
in Gujarat by December 31, 2001.
Fully appreciating that it has precious little
time on its hands, the Gujarat Government
has decided to proclaim all 850 families as
deemed rehabilitated. The rationale: As
much as 50 per cent of the families have
okayed the scheme; another 25 per cent or
so have seen the land; while the rest are
yet to inspect the land.
Come January 1, 2002, the NCA will decide
the fate of the dam height whether it will
finally rise to 100 metres by June 2002. If
that happens and the dam construction was
to proceed relatively unhindered, then for
the first time, the issue of raising funds
would take precedence over environmental
and rehabilitation issues. There are many
who would welcome the Government
concentrating on collecting project finance
rather than spending scarce funds on
countering anti-dam propaganda.
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