NHPC Ltd, the government-owned hydro-power company, has been told by its contractors that they will not work with the current escalation clauses of 7-8% per quarter at a time when prices of key inputs like steel, cement and fuel are shooting up.

Subhash Roy, executive director region (III), told FE that contractors want a 40% hike.

He said steel, cement and fuel account for 66% of a typical NHPC project.

With these inputs becoming sharply costlier, NHPC?s earlier outlay of Rs 25,000 crore to add a capacity of 4,292 mw during the 11th Plan is no longer sufficient.

?Project contractors have made several presentations on the rising cost and have stalled construction job while waiting for our response. The NHPC board will soon meet to discuss on the issue,? Roy said.

The silver lining is that, while contractors have stopped work, NHPC in any case has to go slow during the monsoons when it is faced with raging mountain streams at most of its locations.

Steel is the most critical component in a hydro-power project?around 35 tonne of steel is required for every megawatt of capacity installed. Dams and other hydropower structures cost more to build than any other civil structure. For one, dam builders have to use steel made to their specifications and this costs much more than ordinary construction steel. NHPC needs A-Seismic construction steel.

The price of such steel has shot up from Rs 25,000-30,000 per tonne in 2007 to Rs 68,000 per tonne, translating into an extra cost of Rs 150 crore for a 1,000 mw project. So, NHPC will need an extra Rs 650 crore just for the steel required to implement its plan to add 4,292mw capacity during the 11 th Plan. All these projects are stuck. The NHPC board has a difficult choice?review the entire investment plan or put projects on hold till steel and cement prices come down or at least stabilise at some level and give NHPC enough time to rework its plans. The agitation in the Darjeeling hills has added to NHPC?s woes, by making it difficult to transport material to the 132mw Teesta Low Dam III and 160mw Teesta Low Dam IV projects.

Among the projects affected, apart from the Teesta Low Dam projects in West Bengal, are the 240mw UN (II), 120mw Sewa (II), 45mw Nimmo Bazgo, and 44mw Chutak projects in Jammu & Kashmir. In Himachal Pradesh, it is implementing 800mw Parbati (II), 520mw Parbati (III) and 231mw Chamera (III).

In Assam, it is implementing the 2000mw Subansiri lower project, which is the biggest hydroelectric project taken up in India.

All these projects are scheduled for commissioning within the 11th Plan period ending 2012.