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Despite lawsuit, Himachal Pradesh re-tenders mega hydro project

Last Updated: Wednesday, July 23, 2014 - 16:08

Shimla: Himachal Pradesh will re-seek bids for a multi-million dollar hydropower project that is under litigation with Reliance Infrastructure and has unsettled financial issues with the previous bidder, the Netherlands-based Brakel Corp.

The Cabinet, presided over by Chief Minister Virbhadra Singh, last week approved global bids for the 960-MW Thopan-Powari-Jangi project in Kinnaur district, famous for its luscious apples, an official of the state`s directorate of energy told a news agency.

The project was allotted to Brakel in 2008. But the Himachal Pradesh High Court annulled it on October 07, 2009, on a plea by Reliance Infra, one of the bidders. Brakel moved the Supreme Court but withdrew to pursue remedies suggested by the apex court in its order April 1.

Reliance Infra`s petition challenging the state`s decision not to allot the project to it is pending in the apex court. The high court wanted the state government to take a "fresh decision as to whether it wants to re-advertise the project or wants to act on the basis of the old tender".
Officials of Reliance Infrastructure declined to comment on the decision of the state government to go for re-bidding of the project. "We can`t comment since the matter is sub judice," a senior company official told a news agency.

Brakel officials expressed intrigue. "The government seems to be going for fresh bidding in a hurried manner without resolving the financial implications with us," an official of Brakel, who wished not to be named as he was not authorised to speak, told a news agency.

The government, he said, has failed to resolve two issues: Forfeiture of the company`s up-front premium of Rs 280.69 crore (USD 46.78 million) and the damages of Rs 2,717 crore levied on it for causing a loss to the state exchequer by delaying the project.

"We got a show-cause notice from the government March 28 about forfeiture of up-front premium and imposition of penalty. We filed the reply within one month of the notice. Till date, there is no reply from the government," said the official.
Brakel, in its April 28 reply, said: "It`s rather strange the government defended its actions and allotment in favour of Brakel before the Himachal Pradesh High Court. After the judgement, the government neither filed a special leave petition nor went for re-bid."

"The basis of the alleged loss of Rs 2,717 crore has not been disclosed and the calculation thereof also seems to be based only on assumption and presumption and without proving of actual loss," the company said in its reply, seen by a news agency.

Brakel also clarified that Adani Power -- which was included as a consortium partner in the project -- had deposited the upfront premium. "How can the government claim upfront premiums from two companies (one from the old bidder and another from the new one)."

Interestingly, in an affidavit signed by Joint Secretary-Power SP Paul, the government informed the apex court at one of the hearings that "allotting the hydropower project to Brakel is in the interest of the State".

The state government had 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 pact, was entitled to get from Brakel 12 percent free power for the first 12 years, 18 percent up to 30 years, and 30 percent up to 40 years. The government would have earned Rs 250 crore annually by selling the free power.

The Thopan-Powari-Jangi hydropower project, one of the most viable ones, requires an investment of over Rs 7,000 crore and aims to generate 4,000 million units per year. It was to be commissioned by 2017.

Assuming the fresh tendering process takes six months, if all goes well, it will require another nine years for the project to go on stream. That would take it to 2024.

First Published: Wednesday, July 23, 2014 - 16:08

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