Plan to transfer 4 projects to HPPCL hits roadblock

Subhash Rajta

Shimla, August 8

The plan of the state government to transfer four hydroelectric projects from Himachal Pradesh State Electricity Board Limited (HPSEBL) to Himachal Pradesh Power Corporation Limited (HPPCL) has run into rough weather.

Planning Department flags concerns

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• The state Planning Department has flagged inevitable delay, additional costs and possible objections from the German funding agency to the proposal to change the executing agency for these projects, to be built at an estimated cost of Rs 880 crore.

The state Planning Department has flagged inevitable delay, additional costs and possible objections from the German funding agency to the proposal to change the executing agency for these projects, to be built at an estimated cost of Rs 880 crore. In view of the potential problems, the department has asked the government to review its decision.

The projects that the government seeks to transfer to the HPPCL are SAI Kothi-I (15 MW), Sai Kothi-II (18 MW), Devi Kothi (16 MW) and Hail (18 MW) in Chamba district. The HPSEBL Employees Union had opposed the orders to transfer the projects saying it would lead to unnecessary delay in their execution and KfW, the German funding agency, was likely to raise objections to the decision.

Now, the Planning Department has flagged the same issues. “As per the loan agreement, the prior consent of KfW is a must in case any modification is done to the project, executive agency’s name, etc…,” it has observed. The funding agency will appraise the projects afresh to evaluate the credentials and capacity of the HPPCL to execute them. “This will cause a delay of at least one year in the execution of these projects,” the Planning Department has noted.

It has stated, “Another delay of an unknown period in getting fresh approval from the DEA and the CAAA is inevitable.” The department has observed that “a greater risk lies in KfW disagreeing on the move to change the executing agency”. It has cautioned the government against additional costs likely to be incurred on the transfer of these projects.

“The HPSEBL has already spent Rs 18.28 crore on these projects and the government or the HPPCL will have to repay it. Also, the change might invite additional financial costs in terms of commitment charges, which are unknown at this stage,” the department has said.