‘Tough decision’ taken a few days ago; HCC’s finances said to be in really bad shape
SRINAGAR: The 93-MW New Ganderbal hydropower project may well be jinxed. Hanging in the air since it was conceived in the early 1970s, it was put to bidding nearly 40 years later in 2012, a bid that was won by the Mumbai-based Hindustan Construction Company (HCC). However, due to the government’s view that the cost of the project was too high – about Rs 10 crore per MW – the contract was not allotted until July last year. But now it was the turn of the HCC to dilly-dally, because its finances were in really bad shape. Sources within the company told Kashmir Reader that the financial position is so bad that it even struggles to pay salary to its employees.
After repeatedly extending the deadline for signing of the contract, the Jammu and Kashmir government has finally cancelled the contract. Highly placed sources told Kashmir Reader that the state-owned hydropower company, State Power Development Corporation (SPDC), took the tough decision a few days ago. Their hand was forced, they said, after the HCC kept delaying signing the contract for one reason and then another.
The cancelled contract has again put into doubt the construction of the ambitious project on river Sind, a tributary of the Jhelum, in Ganderbal district. The government will suffer nominal losses to the tune of Rs 100 crore per year because of the project not coming to fruition.
“The contract stands cancelled,” top sources in the SPDC told Kashmir Reader. “An amount of Rs 10 crore has been encashed to HCC a few days ago, a decision that was taken after threadbare discussions with the company.”
The sources said that the government only needed to withdraw the Letter of Intent (LoI), an informal contract signed between the two parties at the time of allotment. They said it will be done after seeking opinion from the government. The company, as per the laid rules, had to take over the project within 28 days of allotment, a responsibility that the HCC has already postponed thrice.
Sources in the HCC, too, admitted that the project has gone from them.
The officials in the SPDC said that new tenders will now have to be floated. “The cancellation means a nominal loss of Rs 100 annually, in addition to the delay. It also means the freezing of the scheme to augment drinking water supply, which this project was going to supply to the Rangil plant,” officials said. “Now new tenders have to be floated, a process that will be complete soon if all goes well.”
The cancellation of the contract is also a big blow for the HCC, which has a 25 percent overall share in India’s hydropower projects. In Jammu and Kashmir, the HCC is currently building the Kishenganga power project in Gurez valley. It has earlier completed two hydropower projects at Chutak and Nimbazo in Ladakh region, both funded by the National Hydro Power Corporation (NHPC). It is currently constructing a 1.5-km excess tunnel at the Sawlakote hydroelectric project. It is also involved in road construction in the state.