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Corporate debt restructuring and a revival package with Tamil Nadu Government funding have been cleared for the Rs 1,023-crore, New Tirupur Area Development Corporation Ltd (NTADCL) project.
The NTADCL, a public-private-partnership for water supply and sanitation infrastructure, promoted by IL&FS and the State Government has got a new lease of life with the Government passing an order last week for a Rs 150-crore revival package. A CDR has also been done by the banks, according to Ms Thangam Sankaranarayanan, Chairman, NTADCL.
The CDR package involves conversion of 15 per cent of the debt to State Government equity, she said, addressing a meeting on PPP in water sector.
The Government Order provides for the State Government to pay a ‘fair price' for about 100 million litres a day (mld) to be supplied by the corporation. However, she declined to elaborate further on the package.
According to highly placed sources, the State Government will pay Rs 21 a kilolitre to buy the 100 mld to supply for domestic consumption.
This is an `opportunity cost' based on an estimation of the cost the State Government would incur to create a similar infrastructure to supply that quantity of water.
NTADCL's debt is around Rs 800 crore, including Rs 200 crore subordinate debt. A portion of the debt is to be converted into equity of the State Government with a stake in the holding company, The Water Investment Company Ltd, through which the two partners have promoted NTADCL. The 185-mld project has established the water supply and sanitation infrastructure for the Tirupur textile industry hub with water sourced from the Cauvery river, 60 km away. It was funded an equity of Rs 323 crore and a debt of Rs 700 crore from a 19-member consortium led by IDBI.
Project viability
At the time of putting together the revival package, company officials had said the viability of the project had been hit after it failed to reach capacity due to inadequate demand from the industry.
The company was to supply 130 mld to textile units at about Rs 55 a kilolitre (kl), which would also cross subsidise the balance water to be supplied to the residences in the town and the villages along the pipeline at Rs 3.50 a kl.
NTADCL's cost for pumping, treating and supplying water was Rs 41.70 a kl.
The company was losing about Rs 5.2 crore a month, officials had then said.
The reasons for the low demand were that the units continued to tap ground water even after the project went on stream. Also, officials said the situation deteriorated further after over 700 bleaching and dyeing units, representing NTADCL's consumer base, were shut down last year on pollution-related issues following an order by the Madras High Court.
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