Four river interlinking projects to generate Rs 2.6L cr biz

Business opportunities worth Rs 2.6 lakh crore are expected to open up for engineering, procurement, and construction entities (EPC) players by financial year ended 2035 (FY35) for the completion of four priority interlinking river (ILR) projects, according to an Investment Information and Credit Rating Agency (ICRA) study released on Monday.

Around a third of these (worth about Rs 80,000 crore) are estimated to be awarded in the next four years for companies involved in the construction of large irrigation projects.

The National Water Development Agency (NWDA) has identified 30 ILR projects (16 peninsular river links and 14 Himalayan River links) to be funded 60 per cent by the Government of India and the remaining by state governments. All these ILR projects are declared as national projects.

Of these, NWDA has picked Ken-Betwa, Kosi-Mechi, Parbati-Kalisindh-Chambal and Godavari-Cauvery links, for early implementation. The first awarded ILR project (accounting for 21 per cent of the cost for priority links), the Ken Betwa, is the only one under implementation so far and is expected to be completed by FY32.

Chintan Lakhani, Vice President and Sector Head, Corporate Ratings, ICRA said, “While the Parbati-Kalisindh-Chambal and the Godavari-Cauvery links are in advanced stages of finalisation of the detailed project reports, consensus building among states remains critical for timely implementation of these projects.” These projects are expected to start from FY28 and FY29, respectively.

Peninsular region links are in more advanced stages of implementation as compared to the Himalayan region links. The Godavari-Cauvery project is the largest of the four (at 45 per cent of the cumulative project cost). Kosi-Mechi (the smallest one at 4 per cent the cost for priority links) is estimated to be completed in FY30.

The total implementation cost for all the 30 ILR projects is estimated at Rs 8.5 lakh crore. Accounting for technical adjustments, including change of scope and inflation, it is expected to increase to about Rs 21.9 lakh crore.

As per the original schedule (which spans up to FY2050), 76 per cent of the estimated cost is likely to be incurred towards interlinking of rivers and the balance 24 per cent towards development of hydropower projects.

“Being 60 per cent funded by the Central Government, the counterparty risks and funding risks for these projects are largely mitigated, though the balance 40 per cent exposure to state government finances could be an overhang,” Lakhani said.