State mulls returning power companies’ premium

Tribune News Service

Shimla, September 15

In a step which could further plunge the already grim power sector in Himachal into crisis, the state government is contemplating returning the upfront premium of almost Rs 300 crore to power companies who have expressed their desire to surrender the hydro-projects allotted to them.

The Directorate of Power has prepared a proposal for the consideration of the Cabinet that the request of about half a dozen power producer companies may be considered.

In case the Cabinet gives its nod, the state will have to return the upfront premium paid by these companies to the government after they were allotted to them. The number of such projects whose surrendering might be cleared by the Cabinet could even go up further.

The projects which have made a plea before the government include 449-MW Duggar project in the Pangi area of Chamba district, 400-MW Seli project, 126-MW Bardang project, 104-MW Tandi project, 130-MW Rashil project, all four in the tribal district of Lahaul-Spiti and 220-MW Bara Bhangal project. While the Duggar projects had been allotted to TATA, the 400-MW Seli was awarded to Moser Baer, while the remaining three were awarded to ABG Shipyard Ltd. The Bara Bhangal project had been allotted to the company which executed the Allian Dhawangan and Malana projects in Kullu.

It was on June 24 that the Cabinet had given a nod for returning Rs 85 crore to Reliance Power, paid as upfront premium for the two hydro-power projects of Purthy (Pangi) and Sumte Kothang in Spiti district that the company had surrendered. Reliance had been allotted these two projects about a decade ago, but later they surrendered them on the grounds that the capacity of the 300-MW Purthy project in the Pangi area of Chamba had declined by more than 20 per cent. There is a provision in the hydro power policy of the state that a power producer can decline to take up the project on these grounds. In case of Sumte Kothang hydro-power project in the tribal district of Lahaul-Spiti, Reliance had declined to execute the project due to stiff opposition by the locals.

Sources said the main plea cited by most of these companies was that the projects had become unviable or on technical grounds. “Barring the Bara Bhangal project, parts of which now fall in the wildlife sanctuary, in all other cases the grounds taken for surrendering the projects are rather flimsy,” said an official.

He added that the interest of investors in the power sector was rather poor and in case some other projects were allowed to be surrendered, it would send a wrong signal.

He pointed out that unless and until there were valid reasons for surrendering, the government must not accede to their demand.

‘Flimsy ground to surrender projects’

• In case the Cabinet gives its nod, the state will have to return the upfront premium paid by about half a dozen power producer companies.
• The number of such projects whose surrendering might be cleared by the Cabinet could even go up further.
• Sources said the main plea cited by most of these companies was that the projects had become unviable or on technical grounds.
• Barring the Bara Bhangal project, in all other cases the grounds taken for surrendering the projects are rather flimsy, an official said.