The Environment Ministry has turned down a NHPC proposal to use assets located on forest land as collateral to raise funds for the Subansiri Lower hydel project which is facing an over 300% cost escalation. The project is located on the Arunachal Pradesh-Assam border.
Official records show that “NHPC requested for an NOC for using their assets located on the forest land for collateral purpose for raising funds… from the financial institutions to meet the capital expenditure of Lower Subansiri Hydroelectric Project” and the Arunachal Pradesh government, subsequently, sought a clarification from the Ministry on the matter.
The Environment Ministry, according to a letter seen by The Indian Express, examined NHPC’s “proposal to mortgage assets on diverted forest land” and ruled that it is “not tenable” under the provisions of the Forest Conservation Act now known as the Van (Sanrakshan Evam Samvardhan) Adhiniyam, 1980.
The Ministry’s October 10 letter to the Arunachal Pradesh government said that “a collateral purpose refers to a secondary purpose beyond the principal object for which the forest land was approved for non-forestry use” under the Act.
Underlining that the “ownership and title” of the diverted forest land “remain with the forest department”, the Ministry referred to condition No 13 of the 2004 approval, which specified that “the forest land shall not be used for any purpose other than that specified under the proposal”.
“Mortgaging the land or assets created thereon for financial gain constitutes use for a collateral purpose and is therefore beyond the scope of approval granted under the Adhiniyam,” the Ministry said.
Asked about its impact on the Subansiri Lower project and if NHPC sought similar NoCs from any other state government, NHPC’s executive director (Subansiri) Rajendra Prasad said he was not authorised to comment on the matter. Requests for comments emailed to NHPC Chairman and Managing Director Bhupender Gupta and the Arunachal Pradesh forest department did not elicit a response.
Story continues below this ad
This March, the NHPC board cleared a borrowing plan for raising of debt up to Rs 6,300 crore during FY 2025-26 through secured, redeemable, taxable, non-cumulative, non-convertible corporate bonds, term loans or external commercial borrowings, in suitable tranches and on private placement basis. On August 29, a revised borrowing plan to raise up to Rs 10,000 crore was approved.
While the first four of the eight units of the 2000-MW Subansiri Lower HEP are expected to be operational this month, a commercial operation date (COD) is yet to be finalised.
In a press statement last week, NHPC said that the final four units are scheduled for sequential connection during 2026–27, noting that the “project cost increased from Rs 6,285 crores at the 2002 price level to approximately Rs 26,000 crores at the current price level, primarily due to the extended construction period, escalation charges, and interest during construction (IDC)”.
On December 2, NHPC announced the successful synchronization of one of the project’s eight 250-MW units with the national power grid. The commissioning process commenced with two units which went on mechanical run on October 24 and November 6, respectively. Another two units are being tested now during wet commissioning.
Story continues below this ad
Cleared in 2005, the Subansiri Lower HEP at Gerukamukh on the Arunachal Pradesh-Assam border remained in limbo between 2011 and 2019, stalled by local resistance in Assam and court cases over issues of dam safety and downstream ecological fallout.
