Himachal Government Readies To Cancel Brakel Project Allotment

Shimla: The government is bracing up to face a legal battle as it prepares grounds to cancel allotment of a 960 MW Jangi-Thopan-Powari mega hydro project on Satluj river, handed out to Dutch company Brakel Corporation, two years ago.

Top government executives disclosed, “the matter has been referred to legal hawks so that the government can take a informed decision about a possible legal battle that it would be saddled with, if the cabinet decides to cancel the project allotment outright.”

“Brakel has breached various terms of agreement and most critical is that it has not been able to assure the government of its financial worth for handling a project of this size, which involves long term investments worth about Rs 8,000 crores,” the official said.

The cabinet that met on Monday examined power secretary Ajay Mittal’s report on the project and asked chief secretary Asha Swaroop to have the matter legally examined before a final decision about its cancellation could be arrived at.

For misleading, the government is even toying with forfeiting the Rs 200 crore upfront money paid by Brakel against the project allotment. “The decision to cancel the project allotment could be taken soon,” the official privy to the developments claimed.

Government officials claimed that the money paid came in by selling 49 percent equity to Gujarat based Adani group of companies. Brakel had not shown any financial worth to pay this amount on its own.

They have not been able to present papers about equity participation of partners the company claims to have onboard for the project, the official said.

However, Brakel spokesman Sanjeev Bhushan maintained, “we did present all our equity partners and their financial worth before the government committee and we will do so again before the new committee headed by chief secretary Asha Swaroop, constituted by the cabinet.”

Reliance Energy, a rival bidding company had dragged the government and the bid winning company to court, arguing that terms of allotment had been violated and the project instead be allotted to second highest bidding company on matching terms of the winner.

The government let the court know that it would re-examine the allotment and if it found violations, the agreement would be cancelled. New allotment would be made by inviting fresh global bids.

Outbidding Reliance Energy, JP Associates and other power generating companies, Brakel Corporation – an upstart company’s highest bid of Rs 34 lakh per Megawatt secured the two 480 MW projects in a global tendering process in December, 2006.

At the turn of the year, with a new BJP government in place, Brakel had hurriedly paid the Rs 173.48 Cr as upfront money due and another Rs 20 Cr for delayed payments after they were served notice for it.

In their November 2006 presentation, Brakel has shown Halcrow, a London based multinational company; SNC- Lavalin, a Montreal based Construction Company; Standard Bank a South Africa based bank: Ecosecurties, a Dublin based company trading in carbon credits: Energy Infrastructure Overseas; Glenalta Capital and Firecrest Hambro as consortium partners for executing the mega project on the fast flowing Himalayan river.

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