The Centre has agreed to provide an interest free loan of Rs 670 crores to Jammu and Kashmir for the completion of 450-MW Baglihar Hydro Electric Project, which is likely to be commissioned next month. The recommendation to this effect was made by the Planning Commission of India and accepted by the Union Finance Ministry.
Governor, Mr N N Vohra, has acknowledged with gratitude the support provided by the Central Government for accomplishment of this prestigious project. Generation of energy from this first ever major State owned project will give both energy and financial relief to the State.
Apart from the release of the interest-free loan of Rs 670 crore by the Union Finance Ministry, the State Power Development Corporation has also mobilized the matching loan component of Rs 530 crore from various financial institutions and banks, to meet the cost escalation of this project.
The project was initially slated to be completed at a cost of Rs 4000 crores by June 2006 but due to unprecedented floods in mid 2005, the project received a severe set back, as its tunnels got severely damaged. The natural calamity resulted in time and cost over run in the project with the project cost rising from Rs 4000 crores to Rs 5200 crores.
The Centre had earlier on also granted a Special Plan Assistance of Rs 630 crores for the project as part of the Prime Minister’s Reconstruction Plan.