MPSIDC courts more controversy

The ailing arm of the state industries department, Madhya Pradesh State Industrial Development Corporation (MPSIDC), had put the state government in dark, resulting in a counter guarantee in favour of Power Finance Corporation (PFC) to issue Rs 400-crore optionally fully convertible debenture (OFCD) of Shree Maheshwar Hydel Power Corporation Ltd (SMHPCL) despite the company owing Rs 84-crore inter-corporate deposits (ICDs) to MPSIDC. The company is facing imminent closure

State Industry Minister Kailash Vijayvergiya explained in the state Assembly yesterday, in a written reply to a question, as to why SMHPCL was provided with a counter-guarantee of Rs 210 crore raised by Congress MLA Mahendra Singh, that SMHPCL had requested for counter guarantee for OFCD issue backed by PFC. The state government on June 30, 2005, recommended the proposal of the SMHPCL on the condition that it would repay ICDs which it owed to MPSIDC and the company was also asked to obtain and furnish a certificate of repayment from MPSIDC before obtaining the counter guarantee for OFCDs.

 

Later, on September 13, 2005, the minister said in his reply, the state government relaxed this condition that certificate in this regard should be issued only after full repayment of ICDs and provided counter guarantee on agreement between both MPSIDC and SMHPCL.

To which MPSIDC, the minister further added, informed the government on September 29, 2005, that MPSIDC and SMHPCL promoters had reached an agreement and had settled the case of repayment of ICDs of Rs 84 crore. But the minister in his reply also informed the state government had amended a one-time settlement scheme for S Kumars (promoters of SMHPCL) and Modak Rubber but they neither complied to the amended OTS nor did they repay the amount. Vijayvergiya further informed the Assembly in his written reply, that after furnishing further conditions, state government provided counter guarantee on March 9, 2006, for the said Rs 400-crore OFCD.

SMHPCL is in the process of setting up of 400-Mw hydroelectric plant on River Narmada near Mandleshwar.