The mega dam was constructed at Maheshwar near Mandleshwar, Madhya Pradesh. The project was initially conceived for setting up by the Narmada Valley Development Authority (NVDA). Later, it was transferred to erstwhile Madhya Pradesh State Electricity Board (MPSEB) in 1980, before awarding it to S Kumars group (the group) as an Independent Power Project. The group created a Special Purpose Vehicle (SPV) in 1993 in the name of SMHPCL for execution of the project. The project entailed a total estimated cost of ~Rs. 3,939cr (originally Rs. 2,760 cr) to be funded in a debt to equity mix of 70:30. The long-term Power purchase agreement (PPA) for the project was signed in 1994 with erstwhile MPSEB (succeeded by M.P. Power Management Co Ltd as holding company for all discoms in M.P).
The work on the project which started in the year 1998-99 was stalled in September 2001 due to withdrawal of certain lenders impacting the financing of the project. Consequently, SMHPCL approached Power Finance Corporation (PFC) for sanction of debt and the work on the project was started again in November 2005.
Consequently, Shree Maheshwar approached Power Finance Corporation for sanction of debt and the work on the Project was started again in November 2005. The project was delayed partly due to the Narmada agitation and environmental agitation and partly due to promoters’ inability to bring capital. As a result, the Project cost had risen from Rs. 2,500cr to Rs. 8,100cr.
However, in June 2016, Shree Maheshwar defaulted on its loan obligations, leading to PFC and other lenders (Rural Electrification Corporation, Hudco and IFCI Limited) acquiring shareholding in the company, as well as taking over management control. PFC and other lenders eventually acquired a 58% stake in Shree Maheshwar, with Infrastructure India Plc holding approximately 32% and the S Kumars Group holding less 10% of the company. SMHPCL has since then been under various insolvency proceedings, the most recent of which was commenced in September 2022.
Questions have now been raised on the role of Infrastructure India Plc, which owned by American private equity firm, Guggenheim Partners, in the failure to complete and revive the project .
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