Godavari water project runs into loan hurdle

HYDERABAD: The Godavari drinking water project, which aims to supply 172 million gallons per day (MGD) of water to the city, is in limbo with the government failing to give counter-guarantee for the Rs 2,000 crore loan being raised by the Hyderabad Metropolitan Water Supply and Sewerage Board (HMWS&SB) from Hudco. Also, the government has failed to contribute its share of Rs 350 crore for the project.
The Water Board suffered a major setback with the resignation of chief minister N Kiran Kumar Reddy, who was also chairman of the Board. "Now we are facing a big challenge to complete and commission the Godavari project. As per schedule, we have to commission the project by May, which appears unlikely," HMWS&SB managing director M Syamala Rao told TOI.
The cost of the Godavari project, officially known as the Maulana Abul Kalam Hyderabad Srujala Sravanthi Scheme, was pegged at Rs 3,375 crore. Hudco had agreed to sanction Rs 2,000 crore as loan while the government was to pitch in for the remaining Rs 1,375 crore. Hudco had released Rs 940 crore in the first tranche and had put the remaining Rs1,060 crore loan on hold. "Though Hudco is ready to release the second tranche of the loan, the government has not given the counter-guarantee yet," Syamala Rao said.
As a result, the Water Board is in a dilemma and does not know who to approach for funding. "For the Rs 940 crore loan, the Water Board is paying nearly Rs 90 crore per annum as interest to Hudco. The Board is not in a position to pay interest due to its precarious financial condition. Moreover, it is not financially sound enough to approach banks and raise Rs 1,000 crore," a senior official in HMWS&SB's financial wing said.
Meanwhile, in another blow to the project, the finance department has expressed its inability to pay the government's share of Rs 350 crore. "As per the financial commitment, the government has to pay Rs 1,375 crore, but we failed to get clearances from the finance department," the official said.
Initially, the Water board had planned to spend Rs 350 crore on ring main-I (between Ghanpur and Lingampally) & main-II (between Ghanpur and Sahebnagar) to lay 67-km pipeline for the project. Of this, contractors have completed laying pipeline for 25-km and are waiting for payment, the official said. With all these hurdles, the Godavari project might get delayed further. "It is not possible to supply Godavari water to the city even in December 2014," a senior HMWS&SB projects official admitted.