The Himachal Pradesh Cabinet in its meeting held here on Monday, decided to serve show-cause notice to Brakel Corporation NV, asking it to explain as to ?why the allotment of the projects, Jangi-Thopan and Thopan-Powari with 960 MW capacity should not be cancelled?.The cabinet meeting chaired by chief minister, Prem Kumar Dhumal also decided to ask the company

?Why the upfront premium deposited by it forfeited for misrepresenting and giving wrong information to the state government with regard to its financial and technical competence and causing loss to the state, subject to cancellation of the projects.?

Government sources told FE on Monday that the Cabinet also decided to re-advertise the same and invite fresh global bids. It decided that ?the state vigilance will continue with its enquiry into the matter?

Power company Reliance Energy, a rival bidding company had moved the Himachal Pradesh high court challenging the allotment of the two projects with a total outlay of about Rs 6000 crores to Brakel. The case is listed for hearing July 9. The high court has asked the Himachal Pradesh government to clarify its position after it changed stand midway on the issue and the state chief secretary has been directed to file an affidavit stating the government position on it.

The Reliance energy?that lost out the Jangi-Thopan and Thopan-Powari projects to the Dutch concern Brakel Corporation in competitive global bidding?has taken the matter to court citing violations of projects allotment terms and seeking cancellation of the allotment.

For record, the project was allotted to the Dutch company during the Congress government in year 2006. On assuming power at the turn of the year, the BJP government served notice on the Dutch firm asking for immediate committed upfront payments, imposing market interest rates for delayed payments and demanding a change in arbitration terms in the agreement. Agreeing to the governments? conditions, the company paid up Rs 173 Cr as upfront money, Rs 20 crore as interest penalty and accepted the new terms.