PM-KUSUM beneficiaries caught in a web of cost escalation, paperwork for loan

PM-KUSUM beneficiaries caught in a web of cost escalation, paperwork for loan

PM-KUSUM beneficiaries caught in a web of cost escalation, paperwork for loan

Setting up of solar power plants under the scheme’s component-A has become an uphill task as project file preparation takes two years, by which time the total cost spirals up

Bhopal, Madhya Pradesh: Launched in 2019 with a mission to guarantee energy security to farmers through renewables, the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) has proved to be a damp squib in Madhya Pradesh. Farmers who had earlier evinced interest in the project are backing out due to delay in paperwork and cost escalation.

The Union government had targeted an enhanced national solar capacity of 25,750 MW by this year-end through the scheme that has three components.

  • Component-A: To set up solar plants in barren/agricultural lands to attain a total output of 10,000 MW, with an individual plant generating up to 2 MW 
  • Component-B: To provide farmers with 17.5 lakh solar pumps
  • Component-C: To solarise 10 lakh grid-connected pumps that constitute agricultural feeders  

Hoping to benefit from component-A, which does not have subsidy support, farmer Mukesh Rawat applied for a loan from the State Bank of India’s Shivpuri branch in Madhya Pradesh in 2020. Other than taking a loan, he had the option of building the plant through developer(s) or local DISCOM. In the second scenario, he would lease his land to the developer/DISCOM for a reasonable rate, and the latter would be termed as the ‘power generator’.

Rawat’s plan was to set up a 0.5 MW solar power plant on his five-acre plot in Ganeshpur village of Rajgarh district, which entailed a project cost of Rs 2.5 crore then. He also signed a power purchase agreement with the Madhya Pradesh Urja Vikas Nigam Limited (MPUVNL), the implementing agency of the scheme in the State, at the rate of Rs 3.07 per unit.

Unfortunately, power generation never happened, and Rawat’s dream got stuck in paperwork. “I do not wish to take advantage of this scheme anymore. The project cost has risen to around Rs 3.5 crore and the bank is not ready to finance me. They say this financial year’s loan target has been achieved, so the matter can be pursued only after March,” says Rawat.

Citing that private banks are averse to funding, Rawat lists out the reasons that pulled the plug on his solar ambition. At the time of applying, the Goods and Services Tax (GST) on solar panels was 5%, but now it is 12%. Prices of solar equipment parts, including iron, have also increased in a similar fashion.

Above all, what he detests is the cost involved in paperwork. “I have already spent around Rs 30,000 on project file preparation and loan related paperwork. But the bank officials are not ready to increase the loan amount based on that project file. They want me to take a fresh loan. I cannot afford to pay for another project file, especially when there is no guarantee that the loan will be approved,” Rawat vents his ire.

Not just that, the whole process will take over a month. “What will we do if the cost spirals up again,” Rawat poses a pertinent question.

In reply, SBI Shivpuri branch manager Sunil Sonhiya expresses his inability to extend more money based on the old case file. “The bank also has some rules and regulations. We have told them (farmers) this many times. If you want a loan of a higher amount, apply afresh and follow the entire procedure. You will get the loan as soon as the case is approved,” he says.

Kuber Singh of Khajuri Kala village of Bhopal district, who applied for 5 HP pump, is getting paddy harvested on his field (Photos clicked by Sanavver Shafi)

Stating that the bank had received over 45 loan applications under component-A and most of them had been sanctioned, he says, “We are here to give loans. Even if you take a loan of Rs 8 crore, we have no problem. The only thing is you should meet our criteria.” 

High cost, low earnings

As many as 444 farmers, 28 farmers’ collectives, two panchayats and one farmer producer organisation have been selected for setting up solar power plants of a total 122 MW capacity. According to MPUVNL Public Relations Officer OP Sharma, the State first set a total target of 300 MW from solar plants, but later revised it to 500 MW.

Like Rawat, most of the 444 individual farmers had applied in 2020 to set up 0.5 to 1 MW solar power plants, subsequent to which they also signed an agreement to sell electricity to the government at the rates fixed by the Madhya Pradesh Electricity Regulatory Commission.  

Farmers Ladsingh and Naveen Goyal from Nindrakheda in Rajgarh faced the issues that Rawat went through in his quest for solar plant installation. Shubham Rai from Barri Kalan in Raisen district got through the whole process in the course of two years. He wanted to install a 2 MW solar plant, but not anymore.

“With this unprecedented cost escalation, it seems the loan amount can be covered only in another 13 to 14 years as I will be able to make just around Rs 3 to 4 lakh per month, inclusive of the cost of plant maintenance, watchmen, etc. Had the plant started functioning two years ago at a lower capital, I assume the power billing could have been Rs 12 to 13 lakh per month, which could have freed the plant in six years.”

Most of the farmers concur that the cost is high and earnings less. Like Rai, Umesh Rajput of Vidisha and Dinesh Kumar Saxena of Bhopal want to leave the scheme.  

Acknowledging the issues, Sharma says the MPUVNL is ready to help farmers to arrange finances, if need be. “If cost escalation is troubling them, they can complain to us individually or in groups. We will bring the matter to the State government’s attention. There is room for more discussions on power purchase rates fixed by the electricity regulatory commission. Maybe, a decision on increasing the rates cannot be ruled out.” 

Meanwhile, in Hoshangabad district, farmers Ravi Prasad of Taronda Dhana and Umesh Batra of Ritalkhapa have been searching for developers, after applying to set up solar power plants on their plots measuring four acres each almost two years ago.

Dilip Yadav from Sauhagpur, on the other hand, is unhappy that he cannot set up a solar plant on his four-acre plot under component-A because it does not come within the five km radius of a power substation, as mandated by KUSUM. Across the State, there are 1,252 electrical substations  592 under central discom, 531 in east zone and 129 in west zone.  

A 5 HP pump installed in Bunty Chavada's field in Khajuri village. Set up in 2020, the solar powered pump saves him the expenses incurred on electricity for getting water to the field (Photo clicked by Sanavver Shafi)

Farmer Kuber Singh Rajput, a resident of Khujri Kala village in Bhopal district, says he is yet to get the 5 HP-DC submersible solar pump for which he had applied in 2019. Multiple calls to the CM helpline failed to resolve the issue.

Though 57,000 pumps have been sanctioned in the State, only 7,234 have been installed.

Rashtriya Kisan Mazdoor Mahasangh leader Shivkumar Sharma says the solar pump scheme is popular as it has 60% subsidy. "For a 2 HP pump worth Rs 1.44 lakh, a farmer has to pay only Rs 57,000. With applications mounding, the department is unable to meet the demand on time. Hence, the beneficiaries have to wait for years to receive the pumps. There is no transparency as to how they are sanctioned and installed," he says.

Pointing to the solar pump installed in his farm in 2020, Bunty Chavada of Khajuri in Bhopal says, “I get 18 to 20 quintals of wheat from one acre. The crop requires water at six stages of growth. Invariably, Rs 1,000 has to be spent in a week for water. Solar pump has come as a boon as I can save that amount now.”

Edited by Rekha Pulinnoli

The cover image is of a plant supporting a 5 HP solar pump installed on Rajendra Singh's farm in Damoh district of Madhya Pradesh (Sourced by Sanavver Shafi)


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