Himachal allows Dutch firm to begin power project work

Friday, Nov 28, 2008

The Himachal Pradesh government finally gave the green signal Tuesday to Dutch firm Brakel Corp NV to start work on the multi-million dollar hydropower project awarded to it in 2006.

The state cabinet took the final decision to allow Brakel, which had been accused of financial and technical incompetence, to begin construction of the project, according to official sources.

The government cleared the project on the recommendations of a seven-member committee headed by Chief Secretary Asha Swaroop, which the cabinet constituted Nov 7 to give a final hearing to the company.

The state power department and Brakel will now sign the pre-implementation agreement, which is necessary to start construction on the project.

The Thopan-Powari-Jangi hydropower project in Kinnaur district, about 300 km from here, was awarded to Brakel Dec 1, 2006, by the previous Congress government through open international bidding.

Last year, the Bharatiya Janata Party (BJP) - then in the opposition but now in power - had petitioned the governor, seeking a Central Bureau of Investigation (CBI) probe into the Brakel contract.

But when it came to power in January this year, the BJP awarded the same project to Brakel, which made an upfront payment of Rs.1.95 billion along with interest. But the government did not sign the pre-implementation agreement with the company.

Later, the BJP government issued two show-cause notices to the company, citing vigilance probes that had raised doubts about the capabilities of the company to execute the project that requires an investment of more than Rs.40 billion ($869 million).

The cabinet at a meeting July 7 asked principal secretary (power) Ajay Mittal to review the case of the company.

Mittal in his report submitted to the government last month recommended the award be scrapped and the upfront payment of Rs.1.95 billion be forfeited, but the cabinet decided on a second hearing.

Brakel executives met the new panel Nov 21 and contested the government's charge that it had misrepresented its financial capabilities.

The company said that at the time of allotment of the project, the government had also approved seven other hydropower projects.

It demanded that if the evaluation process was not fair at that time, then all the eight projects, including Brakel's, should be cancelled.

Source: Thaindian