Hyderabad: Chief Minister K. Chandrasekhar Rao’s Rs 40,000-crore dream project Telangana Water Grid is set to yield its first results in three months but the government is facing a major challenge in making the project financially viable.
According to preliminary estimates prepared by the panchayat raj department, just the operational cost of Water Grid is Rs 900 crore per year. The power requirement alone is pegged at 186 MW per year.
To pay the bills, the water charges have to be increased to twice or thrice the current levels.
The government is relying on loans to mobilise funds for the project, which is making it costlier with the addition of interest repayments.
The government is still silent on water charges though it is claiming it will provide water free to BPL families, which will further add to the burden.
While the government released Rs 6,000 crore for Water Grid this year, it borrowed Rs 20,000 crore from various agencies at interest rates reaching as high as eight per cent.
Of this, Hudco lent Rs 15,000, Nabard Rs 2,000 crore and the remaining Rs 3,000 crore came from various banks.
In the new Budget, the government has decided not to allot any funds for the Water Grid due to paucity of funds. This would mean the Water Grid will be dependent on more loans for funds.
The government is now looking at Korean K-Water, JICA and IL&FS for loans and appears to have told lenders that it will recover the costs by increasing water charges.
