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CEA prepares new guidelines for hydro projects to curb disputes

CEA prepares new guidelines for hydro projects to curb disputes
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First Published: Mon, Sep 15 2008. 10 15 PM IST

Clear norms: Central Electricity Authority chairman Rakesh Nath says the guidelines will define risk-sharing mechanism, price indexation, arbitration proceedings and pre-qualification criteria among o
Clear norms: Central Electricity Authority chairman Rakesh Nath says the guidelines will define risk-sharing mechanism, price indexation, arbitration proceedings and pre-qualification criteria among o
Updated: Mon, Sep 15 2008. 10 15 PM IST
New Delhi: To minimize contract-related problems such as rate disputes that are hurting several hydropower projects in the country, the Central Electricity Authority, or CEA, the apex power sector planning body, will come out with a new set of contract guidelines for public sector undertakings, or PSUs.
“This model contract (guidelines) to be applied to PSU projects (in the hydropower segment) across the country will clearly define risk-sharing mechanism, price indexation, arbitration proceedings and pre-qualification criteria among others,” said CEA chairman Rakesh Nath.
“It will be applicable to all contractors and consultants (for PSU hydropower projects)... it will be completed by October,” Nath added.
Clear norms: Central Electricity Authority chairman Rakesh Nath says the guidelines will define risk-sharing mechanism, price indexation, arbitration proceedings and pre-qualification criteria among others. Rajeev Dabral / Mint
These guidelines will be used by PSUs such as National Hydroelectric Power Corp. Ltd, or NHPC, North Eastern Electric Power Corp. Ltd, Satluj Jal Vidyut Nigam Ltd, Tehri Hydro Development Corp. Ltd, or THDC, and NTPC Ltd, which are setting up hydropower projects in the country, Nath said.
Mint had reported on 29 January about CEA’s plans to draw up model guidelines that state-owned firms can use when they contract out the setting up of hydroelectric projects in an effort to address delays in many of these—usually due to disputes between the companies and contractors.
A case in point is THDC’s Koteshwar concrete dam in Uttarakhand. The dam’s completion, according to the government, has been held up by Progressive Constructions Ltd, a firm run by the son of Congress party Lok Sabha member Kavuru Samba Siva Rao, as reported by Mint on 4 September. The Centre plans to ban the firm from bidding for contracts related to state-owned power projects.
Even India’s largest hydropower company NHPC’s plan to take its capacity to 10,000MW by 2012 may come unstuck, with seven of its 12 projects being delayed by a depletion of skilled personnel and rate disputes with private contractors, as reported by Mint on 18 January.
NTPC, which is trying to diversify into hydroelectric power, has suffered setbacks on its 800MW Kol Dam Hydro Electric Project in Himachal Pradesh over the delay in settlement of rates with the contractor—Italian-Thai Development Public Co. Ltd.
Hydropower projects are more complex to build and need specialized technology and design compared with thermal power projects. “This is a concern expressed by a few developers. If we have a standard bid document, standard tender document, standard power purchase agreements, then why cannot we have model contracts?” said K. Ramanathan, a scholar at The Energy Research Institute.
Of the country’s 145,000MW power generation capacity, only 32,000MW is generated from hydropower. India is seeking to add 78,577MW of generating capacity in the next five years, 16,553MW of which will come from hydropower projects.
Several projects have been delayed, and the country achieved a little less than half the target of adding 14,393MW of hydropower generation in the 10th Plan (2002-07).
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First Published: Mon, Sep 15 2008. 10 15 PM IST
More Topics: CEA | Hydro | Projects | Disputes | PSU |