The Himachal Pradesh government, which had served a show-cause notice to hydel power generation company, Brakel Corporation NV, threatening cancellation of the Rs 6,000 crore, 960-mw Jangi-Thopan and Thopan-Powari project has suddenly taken a U-turn and signed a ?pre-implementation agreement? with the company.
Managing director of the company, Dean Gesterkamp, who flew to Shimla this week signed the agreement with the chief secretary, Himachal Pradesh government, Asha Swaroop, who also holds the charge of power.
The Dutch company has deposited Rs 86 crore as the second installment of the upfront premium for the project as per the fresh conditions set by the government. The company has been given 12 months for preparation of the detailed project report and 24 months for signing the implementation agreement under the fresh terms and conditions.
Surprisingly, when the BJP government led by chief minister Prem Kumar Dhumal took over, the cabinet asked the company ?why the upfront premium deposited by it is forfeited for misrepresenting and giving wrong information to the state government with regard to its financial and technical competence and project be not cancelled.? The cabinet had also decided to re-advertise the same and invite fresh global bids. It had decided that ?the state vigilance will also hold an enquiry into the matter?.
The Himachal Pradesh cabinet had appointed a Committee of the Secretaries constituted under the chairmanship of the chief secretary to examine the issue. After the committee submitted its recommendations, the cabinet noted that ?the previous government had created infirmities in the bid document whereby the lead member of the bidding consortium was not required to have any substantial financial standing and the previous government knew that Brakel, as the lead partner, did not have any financial strength. Even then, it overlooked this aspect and on the basis of one partner in the consortium that is Standard Bank, the financial strength marks was awarded even though no definite commitment of equity participation was made by the Standard Bank?.
Interestingly, the cabinet noted the advice of the law department and the views of the Committee of the Secretaries that ?because the previous Government had consciously overlooked the infirmities in the bidding process of Brakel, and because legally a successor government cannot put the blame for said infirmities now on Brakel, it would now not be legally possible to back out from the allotment made by the previous government, especially since in the eyes of law the contract has been established with the payment by Brakel of the upfront and penal interest imposed by the present government.? So now decks have been fully cleared for the project, albeit at a time when the code of conduct is in force in view of forthcoming Parliamentary elections.