PFC delivers a bombshell in Hyderabad

Touted as the biggest lift irrigation project in the world and the premier initiative of the last BRS administration, the Kaleshwaram mega project is about to be classified as a non-performing asset (NPA).

The state government has consistently neglected to make the monthly installment payments (EMIs) on the loan that it obtained from Power Finance Corporation (PFC). The government now owes the company Rs 1,400 crore. There were three installments missing. In response, the PFC has requested that the government pay the outstanding balance or face declaring the Kaleshwaram lift irrigation project (KLIP) non-performing asset (NPA).

High ranking officials said that the government’s financial difficulties in the last quarter of the 2023–24 fiscal year prevented it from making the installment payments.

Having taken office in December 2023, the Congress has had significant challenges in meeting its financial obligations as the outgoing administration had used up all of its funds prior to its resignation in the latter part of 2023. “For the past three months, we have not had enough money to pay the funding agencies the principal amount plus interest,” government sources told Hans India.

The previous administration borrowed heavily from PFC and other central financial organizations, such as the Rural Electrification Corporation. The REC has previously voiced concerns about loan repayment and requested a report from the government about the damage caused by the three barrages that occurred recently: Medigadda, Annaram, and Sundilla.

Senior Irrigation Department officials were questioned by Power Finance Corporation representatives on the reason for the monthly installment payment delay, according to senior authorities. For the purpose of building the Kaleshwaram lift irrigation project, the previous government obtained institutional loans of around Rs 25,000 crore. Action against the government would follow loan nonpayment.

By guaranteeing the creation of income from the Kaleshwaram project, the government obtained financing from the PFC. The deal that the government engaged into with the company would be violated if the loan amount was not paid back, the authorities said. According to officials, the government would face more financial strain if the loans were not paid back on time since interest and penalties would be applied to the outstanding balance. Loan payments has been dispersed across a 25-year period.