A white elephant? No water from Kaleshwaram, but project costs Telangana around Rs 18,000 cr annually

A white elephant? No water from Kaleshwaram, but project costs Telangana around Rs 18,000 cr annually

Hyderabad: With the Rs 1 lakh crore Kaleshwaram Lift Irrigation System (KLIS) out of operation since last October, Telangana might not be getting a drop of water for irrigating large swathes of fields in some of worst drought prone regions of the state but it has to shell out approximately Rs 18,000 crore annually to repay the loans taken to fund the project, ThePrint has learnt.

The state government had set up a Special Purpose Vehicle (SPV) — Kaleshwaram Irrigation Project Corporation Limited (KIPCL) — which raised loans to the tune of Rs 87,449.15 crore from a consortium of banks and financial institutions. The loan amount, which includes the principal and interest, has to be repaid annually over the next 12 years as per the repayment schedule specified in the respective loan agreements, according to documents reviewed by ThePrint.

According to senior officials of the state irrigation department, what has added to their woes is that the signature project of the previous K. Chandrashekar Rao (KCR)-led BRS government is unlikely to become functional anytime soon, after structural deficiencies in one of its three barrages at Medigadda village led to sinking of six of its piers on 21 October, 2023.

“Kaleshwaram project is defunct. No water is being stored in the three barrages. It will take a long time to restore it, if restoration is feasible. It’s sheer criminal negligence. An inquiry is on and we will fix responsibility for the lapses,” Telangana irrigation minister N. Uttam Reddy told ThePrint.

The other two barrages of KLIS — at Annaram and Sundilla villages — are also out of operation since then. “The project for all practical purposes has become defunct, a little over four years after it was inaugurated. Unless the structural deficiencies are addressed and restoration work done, there is no way it will be able to lift and store water from the Godavari. And restoration work is going to take a long time,” a senior irrigation department official told ThePrint.

Minimum payment to avoid NPA tag

Since the last six months, the state has been paying a minimum amount to the lending institutions to avoid the project from being declared NPA (Non Profitable Asset). “Since the last six months, we are paying the minimum due of approximately Rs 150 crore monthly, so that the project is not declared an NPA,” a senior irrigation department official told ThePrint.

The official added that the state’s finances are stressed, forcing only the minimum payment due to the lending institutions. The interest rate on the loans vary from 7.8 percent to 10.9 percent, the official said.

The banks and financial institutions include Andhra Bank, Punjab National Bank, Bank of Baroda, Power Finance Corporation, National Bank for Agriculture and Rural Development and Rural Electrification Corporation.

A second irrigation department official said the state government had originally proposed to service the debt from the revenue generated from the irrigation project. “The state had envisaged that agricultural output because of the project will generate revenues to the tune of Rs 25,000 crore annually. But it looks unlikely to happen,” the official said.

The official added that the SPV, for which the state is a guarantor, was supposed to repay the loan from its own revenue sources. “However, KIPCL has not been able to generate any revenue stream, whatsoever, of its own leaving the state government no option but to repay the loans.”

Telangana’s total debt has shot up by almost 10 times since 2014, and is now crippling its finances, a white paper released by the state government has said. The paper shows that the state’s actual debt, including off-budget repayment of debt raised by government-created SPVs, is up from Rs 72,658 crore in 2014-15 to Rs 6,71,757 crore in 2023-24.

The paper says that of the total debts raised by SPVs, approximately 59 percent has been raised on account of the Kaleshwaram project.

A performance audit of the KLIS done by the Comptroller and Auditor General last year has also found the project economically unviable. The CAG report will be tabled in the ongoing assembly session, Telangana irrigation minister N. Uttam Reddy told ThePrint.

Touted as one of the largest and costliest, KLIS was the flagship project of the former BRS led  government. KCR inaugurated the project in June 2019, months ahead of the then assembly elections.

When fully operational, the three barrages diverted 195 TMC (thousand million cubic feet) of water to irrigate approximately 18.25 lakh acres of farmland in 13 districts in drought-prone regions through a network of canals, tunnels, lift systems and reservoirs.

The Medigadda barrage was built at a cost of Rs 3,662 crore, the one at Annaram Rs 2,195 crore and the Sundilla barrage Rs 1,811 crore. While 80 percent of the KLIS has been completed till date, its canal work and distributary networks are not yet ready.

Re-engineering led to cost escalation

KLIS took off from its predecessor, the Pranhita-Chevella project, which envisaged diversion of 160 TMC of water by constructing a barrage across the Pranahita (a tributary of the Godavari) at Tummidihetti to irrigate the arid regions of undivided Andhra Pradesh.

In 2008, the then CM of Andhra Pradesh, Y.S. Rajasekhara Reddy, had laid the foundation stone of the project. The Rs 40,000 crore Pranahita-Chevella project proposed to irrigate 16.4 lakh acres of agricultural fields in seven districts.

But soon after he took charge as the Telangana CM in 2014, following the bifurcation of erstwhile Andhra Pradesh, KCR announced that the project will be re-engineered to cover more areas under irrigation. The original proposal was abandoned and work started on the Kaleshwaram project.

The concept was the same but the Kaleshwaram project was made much grander. Instead of one barrager, the project had three and the number of districts to be irrigated was increased from 7 to 13. The capacity of reservoirs was also increased. The re-engineering led to the project cost increasing from Rs 40,000 crore to Rs 80,000 crore, irrigation department officials said.

(Edited by Tony Rai)