Politics Trips B K Modi Power Venture

The Bhupendra Kumar Modi group's diversification into power generation has run into a major stumbling block as the Panipat Phase VI project, which the group was to set up in association with two US-based utility giants, NMS Corporation and North East Utilities, has been all but formally scrapped by Haryana's Kisan Vikas Manch government.

The 210-megawatt coal-fired unit at Panipat was to be set up at a cost of around Rs 200 crore. This is significantly less than other projects of similar size as it had been partially completed by the cash-strapped Haryana State Electricity Board till financial constraints forced the board to hand Phase VI over to a three-member consortium.

 

The consortium had also been negotiating with the then Bhajan Lal-led Congress (I) government for buying out Panipat phase V which has similar generating capacity. The consortium members said: "Acquiring phase V and modernising it to international standards would have meant an additional investment of around Rs 100 crore". The talks ended inconclusively as the Congress (I) lost the elections.

"It has been over six months now since the Haryana government has apprised us of the exact status of the project. Orders for plant and machinery had already been placed. We understand that the project has been scrapped though no formal communique has been forwarded to us," the sources added. In the process, the Haryana government will lose out over Rs 300 crore as investment if the project remains a non-starter. Consortium members feel the project has been become a victim of political rivalry between the Bhajan Lal-led Congress (I) and Bansi Lal's Kisan Vikas Party, a close ally of the Bharatiya Janata Party.

A formal scrapping of the project would also deal a severe blow to the B K Modi group which has already been plagued by family squabbles and major differences with financial institutions relating to group flagship Modi Rubber.

According to a growth strategy chalked out by B K Modi, power business was to contribute at least Rs 2,500 crore to the group turnover by 1999. The group had targeted an ambitious Rs 20,000 crore turnover by the end of the decade. Under the group's restructured operational setup, the power generation venture was to be a part of ModiKem which will oversee the group's tyre business and all new projects.

B K Modi recast his group's operations last year whereby all joint ventures have been placed under a holding company, ModiCorp, in which Modi now wants to dilute his stake to 51 per cent.