Maheshwar dam on the Narmada will have to be abandoned, testimony to improper river management in India

One dam, at least, will not be operationalised on the Narmada river. The Narmada Bachao Andolan (NBA) has fought hard for four decades against the construction of big dams on the river, beginning with the struggle against the Sardar Sarovar dam at Navagaon in Gujarat. Even though this mass struggle has resulted in better rehabilitation and resettlement for the oustees of the various dams on the Narmada than in dams on other rivers built earlier across the country, nevertheless, the construction of the dams, which are ecologically and socio-economically harmful, could not be stopped. However, the Maheshwar dam at Mandleshwar in Khargone district of Madhya Pradesh, which was to produce hydroelecticity and for the construction of which, Rs 5,000 crore have been spent so far, will in all probability not be operationalised.

The Indore Special Bench of the National Company Law Tribunal (NCLT) has, in its order of July 11, 2025, directed that the Shree Maheshwar Hydel Power Corporation limited (SMHPCL), which had been given the contract to build and operate the Mandleshwar dam, be liquidated. The main creditor among the many financial institutions that had given loans, Power Finance Corporation, had applied to the NCLT for a Corporate Insolvency Resolution Process (CIRP) against SMHPC as it had defaulted on its loans and had also abandoned work on the project. Normally, the period in which the CIRP is to be completed is 180 days. However, despite the process having been extended for 840 days, no resolution was possible as no applicant firm — either government or private — was prepared to bid for taking over SMHPCL. The main reason being that there were no records available regarding the amount of construction and rehabilitation and resettlement work still left to be done and so there was nothing on the basis of which a takeover bid could be prepared. Therefore, citing several orders of the Supreme Court, the NCLT decided that enough time had been allotted for CIRP which had not resulted in a buyer. There was thus no other option but to liquidate the company.

The problem is that except for the skeleton of the dam that has been built on the river, as shown in the photo, there are no assets. Moreover, not only has the Government of Madhya Pradesh said that it will not take over the project, but it had also earlier abrogated in April 2020 the Power Purchase Agreement (PPA) that SMHPCL had with it. Therefore, there will be no buyers for the bare dam structure, without a PPA in place. Thus, the structure will stand as a mute testimony to improper river management in this country.

The construction of the Maheshwar dam was started in 1994, under a public private partnership model between the Government of Madhya Pradesh and SMHPCL. The electricity sector was opened up for privatisation in the early 1990s and two important reasons were given for this move. First, proponents of privatisation claimed the government was constrained for funds, which the private sector could bring in. They also claimed that private companies would bring in better performance in terms of completing projects on time and better quality of electricity at lower costs. The Maheshwar project, however, represents much of what has gone wrong with privatisation in the hydropower sector as, in an effort to cut costs, SMHPCL tried to evade the responsibility of proper rehabilitation and resettlement of the project affected persons. This led to the people organising under the aegis of the NBA to fight for justice. This delayed construction and the costs of the project kept going up. Even as the proponents claimed to have tied up all finances, they could not manage to fund crucial activities, and the pace of the project remained slow.

The strong mass movement of the affected people to stop work on the dam and for proper rehabilitation and resettlement braved heavy repression by the government.  The people not only stood strong but, under the leadership of Alok Agarwal and Chittaroopa Palit, proved through diligent research that the cost of power under the PPA would be exorbitantly high at close to Rs 9 per unit as compared to the power being produced from the Indira Sagar and Omkareshwar dams upstream or from other renewable sources which were as low as Rs 3 per unit. The government and SMHPCL persisted nevertheless, with loans from various government financial institutions led by Power Finance Corporation which totalled about Rs 1,900 crore, which is far more than the Rs 499 crore invested by the SMHPCL. Finally, all the funds were exhausted and by 2015, the work had come to a complete standstill while rehabilitation too was incomplete, in violation of the terms of the environmental clearance that construction work could progress only after rehabilitation and resettlement was complete. Eventually, the Government of Madhya Pradesh cancelled the PPA, thus making the project completely unviable.

The Power Finance Corporation and other creditors then moved the NCLT for insolvency resolution. But that too did not yield any positive result and now the dam will have to be abandoned. In the process, the river flow has been disrupted, some people near the dam wall on both sides of the river have been displaced and a huge amount of public funds has been spent, with nothing to show for it. The NBA, however, is demanding that the Government of Madhya Pradesh should raze the dam altogether and restore the Narmada to its pristine glory. 

Rahul Banerjee is an activist and development researcher

Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth