Shimla: Succumbing to intense pressure from Adani’s, a business house from Gujarat, the Himachal Pradesh cabinet chaired by chief minister Virbhadra Singh at its meet yesterday (4.9.2015) evening decided to refund about Rs 280 crore paid as upfront premium for allocation of two hydroelectric projects that were later struck down.
Offering no explanation, a curt one liner ‘The Cabinet decided to refund the upfront premium to M/S Adani Power limited of Jangi-Thopan (480MW) and Thopan-Powari (480MW) hydel project,’ was all that a press release about the contentious cabinet decision stated.
The issue about allocation of these projects on River Satluj has been hanging fire for years and had been legally contested in the country’s highest courts.
Through competitive international bidding these project in September 2006 had initially been allocated to Brakel Corporation, a Dutch company. Brakel had bid to pay upfront Rs 36 lakhs per MW of generation potential for the project and had outbid Reliance Energy which offered Rs 30 lakh per MW.
Unable to make the upfront payment Brakel roped in Adani Power Ltd and paid up Rs Rs 280.60 crore for the committed bid amount as well as interest for delayed payments.
Brakel had also changed the project bidding terms by convincing the government into merging the two contiguous projects into a single executable one. The merger changed the financial dynamics of the projects and lowered construction costs considerably, which was challenged in court by Reliance Energy.
The courts struck down the project allocation to Brakel on the grounds for misrepresentation of facts and for combining the two project which it termed as illegal.
Where the two warring power companies took the legal battle into Supreme Court, the Himachal Pradesh government served notice on Brakel, cancelled the project allocation and imposed a fine of Rs 280.60 crore for misrepresentation of facts and revenue losses accrued because of delays in executing the project.
It was in July 2014 that the Himachal cabinet decided to invite fresh bids for the project.
Between 2006 and 2015, the country’s power sector has undergone a sea change and falling electricity prices and high costs with long gestation periods has rendered hydropower sector into a high risk investment area.
After failing to attract power companies in the rebid process, the Jangi-Thopan (480MW) and Thopan-Powari (480MW) projects were re-advertised three times on upfront premium basis and ended up with Reliance Energy as the sole bidder for it.
While the project after this round of bidding has been offered to Reliance Energy and yet has to be signed into a binding agreement, the cabinet met here yesterday and has approved to return the money that Adani Power had paid in 2008, which had later been forfeited as a penalty imposed.