NHPC, a major Indian hydropower company, has refuted claims that it offered forest land as collateral to raise funds for its Subansiri Lower Hydroelectric Project. This clarification comes after reports indicated that the Ministry of Environment rejected a proposal from NHPC to use forest land assets as collateral.

The Subansiri Lower Hydroelectric Project, located on the border between Arunachal Pradesh and Assam, has faced significant hurdles, including local protests, court battles, and a substantial cost escalation exceeding 300%. These challenges have pushed NHPC to explore various funding options to meet the project's capital expenditure.

According to sources, NHPC sought a No Objection Certificate (NOC) from the Environment Ministry to use assets located on forest land as collateral for raising funds from financial institutions. Official records indicate that the Arunachal Pradesh government subsequently sought clarification from the ministry regarding the proposal.

However, the Environment Ministry examined NHPC's proposal to mortgage assets on diverted forest land and deemed it "not tenable" under the Forest Conservation Act, now known as the Van (Sanrakshan Evam Samvardhan) Adhiniyam, 1980. The ministry clarified that using forest land as collateral constitutes a secondary purpose beyond the principal object for which the land was initially approved for non-forestry use. Mortgaging land or assets created on it for financial gain falls outside the scope of the approval granted under the Act.

The government's rejection of NHPC's proposal underscores the strict regulations governing the use of forest land and highlights the challenges in securing financing for the long-pending Subansiri hydel project. Officials emphasized that forest land cannot be given as collateral for this purpose. The decision restricts NHPC's ability to borrow against the value of its assets and necessitates the exploration of alternative financing options, such as loans, equity, or other means not involving forest land.

While NHPC has denied offering forest land as collateral, the company is reportedly seeking an NOC from the Environment Ministry to use Subansiri Lower project assets for future debt financing. This suggests that NHPC is still exploring avenues to leverage its project assets for financial purposes, albeit without directly offering forest land as collateral.

The rejection of NHPC's initial proposal highlights the government's caution in protecting forest assets and the limitations on using public forest land in financial deals. It also raises questions about the financial viability of the Subansiri Lower project and the strategies NHPC will employ to overcome the funding challenges. At the time of this reporting, neither NHPC nor the government has announced an alternative plan.