The construction of 93-Megawatt New Ganderbal hydropower project, cleared after three decades, has hit another roadblock as the company that had bagged the contract in 2014 has failed to furnish the performance bank guarantee.
An official in the State Power Development Corporation said that the Mumbai-based company Hindustan Construction Corporation had to furnish the guarantee within 28 days after the PDC issued the notification to award the contract in its favor last month.
While the deadline ended on September 4, the company hasn't completed the requisite formality, the official said.
"This has led to a tricky situation. We are assessing the options. The Corporation will discuss the issue in next few days and take a call," he said.
The company is learnt to have approached the PDC seeking "some modifications" in the contract.
"We have to see how we can secure our interests through alternative means in case we decide to go ahead and sign the contract with the company," said another official, adding that the
Corporation was well within its rights to en-cash the bank guarantee deposited by the company with it since it has failed to produce the performance guarantee within the stipulated deadline.
Another option with the PDC is to negotiate with the L2 and L3 after L1 (the company) failed to complete the formalities. The corporation can also terminate the contract and go for fresh tendering.
"But it may turn to be a long drawn process which will further delay the construction of the project," said the official.
A senior HCC official Kamal Verma refused to comment on the issue. "Please contact PDC, they will provide you the details," he said and disconnected the phone.
Managing director PDC Shah Faisal said that the Corporation shall go by the contract condition to decide on the matter.
The New Ganderbal hydropower project, coming up at the cost of around Rs 1000 crore, is the first project in the state that has got the subordinate debt as well as different tax exemptions.
Coming up on river Sindh, the New Ganderbal project is a run-of-the-river project with three units of 31-MW each. The project was conceived in late '80s but formally announced in 1996. Though the HCC had won the bid for the power project in September 2014, it got mired in controversy due to disparity in the tendered and apprised cost, leading to further delay in its awarding.
The state cabinet finally cleared the project on June 16 this year, on the recommendations of a cabinet sub-committee that was constituted to study Rs 150 crore disparity in tendered cost compared to the appraised cost approved by the central electricity authority.
Another PDC official said that some major works including construction of access road to the project site and land acquisition have been completed. This entire work has incurred around Rs 100 crore expenditures, the official said, adding that the PDC is in the process of finalising all the formalities to start much awaited construction of the project.
As per the contract details the project, which will be owned by the PDC, is to be completed within 48 months from the date of issuance of the letter of intent. The PDC owns 21 projects with cumulative capacity of 1211 MW, and is planning to set up around 10 projects.