Solar park project runs into mortgage row

Lending major Vijaya Bank has red-flagged the manner in which the state government acquired land for its flagship solar park project, hailed as one of the largest in the world, coming up at Pavagada, about 150 km from Bengaluru.

The Karnataka Solar Power Development Corporation Ltd (KSPDCL), which is building the solar park, has taken agricultural lands on lease for the project. But these are lands farmers had already mortgaged as security for loans, Vijaya Bank has charged.

The solar park is coming up on 12,800 acres spread across five villages in Pavagada — Balasamudram, Tirumane, Kyataganacharlu, Vallur and Rayacharlu. The dispute raised now pertains to lands in Tirumane and Vallur, where Vijaya Bank is said to be the only major bank.

“Though valid mortgage exists, the corporation has taken these lands on lease without taking any no-objection certificate from our bank,” Vijaya Bank general manager C Sathish Ballal stated in a letter to the State Level Bankers’ Committee (SLBC), a platform for discussion between the banks and the state government. DH has a copy of the letter.

These are lands mortgaged by 874 farmers having crop loans worth Rs 16.52 crore and 11 farmers with agriculture term loans of Rs 44 lakh at the Pavagada branch of Vijaya Bank.

“Subsequent to these lands being taken on lease by the corporation for non-agriculture use, there is no cultivation of crops on these lands and hence, the bank is unable to review/renew these accounts resulting in huge addition of accounts to non-performing assets (NPA),” Ballal stated.

The land has been leased for 28-30 years for which farmers get an annual lease rent of Rs 21,000 with a 5% increase every two years — a land pooling model the government is considering emulating for some of its other major projects to avoid the cumbersome acquisition process. Vijaya Bank has also objected to KSPDCL paying rent to the farmers directly.

“This has enabled the farmers to encash the DDs/cheques without clearing their dues outstanding in our bank.”

It could also be that farmers, while entitled to their lease rent, stopped paying or renewing their loan accounts in anticipation of Chief Minister H D Kumaraswamy’s crop loan waiver.

Vijaya Bank wants KSPDCL to get farmers to clear their dues and send the next instalment of the lease rent to the farmers’ loan accounts.

The issue came up for discussion on February 25, where SLBC decided to recommend to the government to ensure the farmers’ liability is cleared, SLBC convenor C B L Narasimha Rao said.

For its part, KSPDCL said lease agreements with farmers were based on an undertaking that their lands were free of any encumbrance. “Initially, we did get such complaints and we asked those farmers to clear the dues first. The bank should bring this to our notice for us to act,” KSPDCL chief executive officer G Bhimsha said, adding that most lease agreements were inked in 2017 itself. “And we are not purchasing land for us to obtain NOC from the bank.”

KSPDCL is a joint venture between the Solar Energy Corporation of India and Karnataka Renewable Energy Development Ltd. The solar park, with an investment of Rs 16,500 crore, is expected to generate 2,000 MW power. “As on today, we have commissioned 950 MW,” Bhimsha said.