The World Bank has reportedly decided against extending $437 million loan to Nathpa Jhakri Hydro-Electric Power Corporation (NJPC) which is implementing a 1,500 MW power project at Himachal Pradesh.

According to reports, the World Bank has written to the Union ministries of finance and power, communicating its decision to withdraw from the project.

The present loan closes on March 2002, and the WB has decided against extending any further instalments. Nearly $100 million more is required for the project, which would now have to be funded through alternate sources. The WB loan was extended once for four and a half years from its earlier closing of December 1997.

It is understood that NJPC will now fund the deficit $100 million through Power Finance Corporation, which has agreed to extend the loan in principle.

NJPC, conceived in 1989, is a 75:25 venture between the Union government the state government of Himachal Pradesh. The first two units of the proposed 1,500 MW plant are expected to be commissioned by the end of 2002. The project has suffered inordinate cost overruns (in nominal terms) from Rs.1,678 crore in 1989 to Rs.9,500 crore presently.