Vadodara: In a major fiscal reset for one of Gujarat’s key civic bodies, the Vadodara Municipal Corporation (VMC) on Friday approved a Rs 1,039 crore payout to the state govt, closing a five-decade dispute over charges for waters from the river Panam, which underpins nearly half the city’s water supply.The standing committee cleared the proposal to settle dues under the Panam water supply scheme, with payments to be made in 12 instalments. Officials said the first instalment of about Rs 200 crore will be released first, with the rest to follow in 11 tranches.The settlement follows the state govt’s decision of waiving interest and penalty components that had accumulated over decades. After recalculation, VMC’s liability was pegged at Rs 1,039 crore, representing the principal amount.The Panam scheme has supplied Vadodara with drinking water since the early 1970s. Water from the Panam dam flows into the Mahi river and is drawn through French and infiltration wells before distribution. The scheme currently meets 50% of the city’s requirements.The project was developed with four stakeholders — VMC, Indian Petrochemicals Corporation Limited (IPCL), Gujarat Refinery and Gujarat State Fertilizers and Chemicals (GSFC). Over time, differences arose between VMC and the state’s irrigation authorities on water charges, leading to a large financial claim.The dispute escalated after the irrigation department raised a demand for Rs 5,329 crore, including charges, interest and penalties. VMC contested the claim, stating it had contributed to the project and regularly paid operation and maintenance costs.Documents placed before the standing committee show that VMC contributed Rs 3.88 crore towards the project’s capital cost and paid over Rs 523 crore towards operation and maintenance over the years.The breakthrough came after the Narmada, water resources, water supply and Kalpsar department reviewed the matter and agreed to waive interest and penalties.The standing committee’s approval formalizes acceptance of the state’s settlement formula and ends one of VMC’s oldest financial disputes, which had persisted for over five decades and remained a major liability on its books.
