Himachal to go for re-allotment of mega hydro project

Himachal Pradesh Tuesday decided to go in for re-allotment of a multi-million dollar hydropower project that is currently under litigation between the Netherlands-based Brakel Corp. and Anil Ambani-led Reliance Infrastructure.

The state cabinet, presided over by Chief Minister Virbhadra Singh, has decided to go in for rebidding for the 960-MW Thopan-Powari-Jangi project in Kinnaur district, a government spokesperson told IANS.

Earlier on April 23, the cabinet rejected the representation of both the companies to re-allot the project to them.

Brakel Corp. had challenged in the Supreme Court the 2009 ruling of the Himachal Pradesh High Court, which ordered cancellation of the allotment of the project to it on a petition filed by Reliance Infrastructure, one of the bidders.

The petition is still pending in the high court and listed for next hearing Aug 5.

"We allow the writ petition and quash the decision of the council of ministers dated Nov 25, 2008, as being arbitrary, illegal and irrational," the high court had said.

Subsequently, the state government decided to invite fresh bids for the project. It even decided to forfeit the company's upfront premium of Rs.280.69 crore ($60 million) deposited with the government for delaying the implementation of the project.

The state government signed an agreement with Brakel in 2008, two years after the project was awarded to the Dutch company, for starting the pre-construction activities for the project.

The government, as per the agreement, is entitled to get 12 percent free power from Brakel. The project requires an investment of more than $1,300 million.

The spokesperson said the government would now seek fresh bidding of the project as per state's old power policy of 2008.

Under the old policy, the bidder is required to offer an upfront premium to bag the project and provide a fixed percentage of the total power generated from the project free of cost as royalty to the state over the period of 40 year.

After 40 years, the project vests with the government.

But the existing power policy, which was framed during the previous Bharatiya Janata Party regime, says the bidder is required to pay a fixed upfront premium of Rs.2 million (Rs.20 lakh) per megawatt and quote additional free power on the basis of which the projects are awarded.

The fixed quota is 12 percent free power for the first 12 years, 18 percent up to 30 years, and 30 percent up to 40 years.

Official sources said the delay in the project is costing Rs.250 crore annually to the state government. This amount could be earned by the government by selling 450 million units provided free by the company.

A recent assessment done by the State Infrastructure Development Board (SIDB) put the loss to the government due the delay in commissioning of the project around Rs.1,400 crore, an official said.

The Thopan-Powari-Jangi hydropower project was to generate 4,000 million units per year.