Srinagar: The Modi government’s Goods and Services Tax (GST) has torpedoed the terms of contract agreed to with the Hindustan Construction Corporation (HCC) to build a hydropower project on the river Sindh in Ganderbal. Officials from the Mumbai-based HCC arrived in Srinagar on Monday to explain why the company had not signed the contract for building the New Ganderbal Power Project. The reason they gave was pithy: GST.
Senior officials of the J&K State Power Development Corporation (JKSPDC) confirmed to Kashmir Reader that the HCC cited the new tax regime as the “reason” for not signing the contract agreement.
Kashmir Reader had on Monday reported that HCC had not signed the contract agreement within the stipulated time, which was September 4, 2017, and company officials were coming to Srinagar to explain why. The HCC won the Rs 810.37-crore contract to build the power project three years ago, in 2014.
“The HCC officials did agree to the Letter of Intent (LoI) issued by the JKSPDC for the New Ganderbal Power Project,” said a senior JKSPDC official. “But the HCC officials claimed that they have no clarity yet (about the contract) following the implementation of GST.”
The JKSPDC on August 8 had issued the LoI to HCC for it to sign within 28 days. After the construction giant failed to sign the LoI, it was issued several notices by the JKSPDC. Several HCC officials flew to Srinagar on Monday and held meetings with JKSPDC for two days on this issue.
“The HCC officials said that they were not clear as the how the GST implies on the project, so they asked revised item-wise rate quotations,” the JKSPDC officials said. “The HCC officials said they need to understand the GST’s implications on the contract.”
Reportedly, the HCC has not yet submitted its (bank) ‘performance certificate’ to the JKSPDC, which is necessary for the project contract.
Confirming the latest development in the long-drawn saga of the New Ganderbal project that is expected to add 93 MW of electricity to the state’s power kitty, JKSPDC Managing Director Shah Faesal told Kashmir Reader, “The issue will take some time now, as we will have to first satisfy ourselves (over the changed terms of the contract).”
“JKSPDC will now revise the project according to the GST, now that HCC has sought an item-wise (revised) quotation.”
GST, a uniform tax regime across the country, was implemented in Jammu & Kashmir from July 7, in the midst of widespread protest against it.
The HCC, which is currently constructing the Kishenganga power project in Gurez, was among six builders that tendered bids for New Ganderbal Power P. The project was conceived of in the early 1970s but was put to bidding only in 2012.
The New Ganderbal project will be HCC’s fourth such venture in J&K.
To oversee its construction, the JKSPDC has tasked Abdul Wahid as its full-time chief engineer.