1. Himachal Pradesh fails to attract bids for hydel project

Himachal Pradesh fails to attract bids for hydel project

Bidding for the 960-mw Thopan-Powari-Jangi project in Himachal Pradesh's Kinnaur district proved to be a non-starter on...

By: | New Delhi | Published: March 18, 2015 12:53 AM

Bidding for the 960-mw Thopan-Powari-Jangi project in Himachal Pradesh’s Kinnaur district proved to be a non-starter on Tuesday as the lone firm that placed a bid chose to withdraw.  The project has been mired in litigation for nearly a decade and saw a tepid response as developers turned risk-averse. The lengthy clearance process for hydro projects and high upfront premium demanded by the state added to problems.

While companies like Adani Power, Tata Power, Reliance Power, JSW Energy, Flex Industries and NBCC had initially shown interest in the project, only Flex Industries eventually submitted the technical and financial bid by March 16, the last day of submission. However, official sources in the state government told FE that even the sole bidder withdrew from the process the next day.

“The failure in attracting bids is related to general uncertainty in the power sector related to securing finances for projects and specifically linked to clearances required for a hydro project from the environment ministry and Central Electricity Authority which can take years,” principal secretary to HP, energy, SKBS Negi, said. He added that the government will hold talks with prospective bidders and extend the bid submission deadline by a month.

A state government official said the Thopan-Powari-Jangi project requires investment of over Rs 7,000 crore and could generate 4,000 million units of power per year. Due to lack of habitation in the area, the land acquisition and rehabilitation and resettlement exercise is easier, making the project cost effective for developers, state officials said. “Given the attractiveness of the project we expect upfront premium of over Rs 90 lakh/mw that we had received for Bijoli-Holi hydroelectric project a few years ago,” Negi added.

The price bid criteria of the project is minimum upfront premium of Rs 35 lakh/mw. In addition, developers are mandated to give 12% free power in the first 12 years, 18% for the next 18 and 30% for the balance 10 years of the operating period. The minimum upfront premium was raised to Rs 35 lakh/mw from an earlier stipulation of Rs 10 lakh/mw.

The project has been delayed due to litigation for years since it was first allotted to Netherlands-based Brakel Corp in 2008 which had partnered with Adani Power for the project. Subsequently, the Himachal Pradesh High Court annulled it in 2009 on a plea by Reliance Infra, which was one of the bidders. “Reliance Infra is willing to match the upfront premium of Rs 36 lakh/mw offered by Brakel but we estimate the project is worth more,” Negi said. Reliance Infra’s petition challenging the state’s decision not to allot the project to it is pending in the apex court.

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