Sikkim Govt Sells SUL’s 60.8% Stake to Greenko to Avoid Debt Trap

On February 2, the Sikkim government decided to divest its entire 60.8% stake in Sikkim Urja Ltd (SUL), the company that owns the Teesta III hydropower project, to Greenko Energies Pvt. Ltd. This decision, aimed at averting a debt trap, was confirmed by Chief Minister Prem Singh Tamang. The state government’s move comes after it took a substantial loan of Rs. 3,500 crore under the previous Sikkim Democratic Front (SDF) regime for the Teesta III project.

CM PS Tamang justified the sale, explaining that the divestment would clear the state’s debts, making Sikkim debt-free. The loan liabilities were transferred to Greenko, which agreed to take over the remaining Rs. 2,895.46 crore loan from Power Finance Corporation and Rs. 184.28 crore owed to Sikkim Bank Ltd. The transaction was finalized on February 5 when the Chief Minister declared that the state had now fully cleared its debts.

However, the decision comes at a time when SUL is in a strong financial position. The company, which had recorded a net profit of Rs. 1,270.19 crore in FY 2022-23, was not loss-making. Despite facing dues of approximately Rs. 3,500 crore from power distribution companies in Punjab and Haryana, the company’s balance sheets showed resilience. Its total outstanding debt stood at Rs. 7,897.73 crore, split between Power Finance Corporation (Rs. 3,954.76 crore) and REC Ltd (Rs. 3,942.97 crore).

Greenko had shown interest in acquiring the state’s stake even during the financially difficult year of 2020-21 when SUL posted losses. The fast-tracking of Rs. 3,500 crore owed by the distribution companies was recommended by the Union Ministry of Power in December 2023 to aid SUL’s revival. This strategic move aims to reduce the state’s financial burden and ensure the continuity of the project under private management.

However, the decision has sparked political debate. The Bharatiya Janata Party (BJP), a partner of the Sikkim Krantikari Morcha (SKM) in both the state and central governments, expressed concerns over the sale. On February 2, D.R. Thapa, President of the BJP’s Sikkim unit, wrote a letter to the Prime Minister, urging the Union government to withhold approval for the reconstruction of the Teesta III dam. Thapa emphasized the need for comprehensive studies and public consultations before proceeding with the project, citing environmental and disaster resilience concerns.

This development underscores the ongoing tensions and differing priorities among political parties in Sikkim regarding the future of the Teesta III hydropower project.