CAG REPORT 2010 ON THE HYDEL PROJECTS IN SIKKIM - Part 1

The CAG in its 2008-09 report published recently has recommended the State Government to strengthen the monitoring and vigil aspects of the hydle power projects execution by the Independent Power Projects (IPPs).

“Monitoring of execution of projects was virtually non-existent”, said CAG after reviewing the performance of the hydle power thrust of the State government.

The State Government displayed no serious intention to act on the agreement inked with IPPs to have multi- disciplinary committee to monitor the various issues arising during the implementation of the projects, the CAG said. The clause in the agreement regarding constitution of the committee for monitoring the projects was included only on paper, said the CGA.

The CAG further indicated laxity on part of Sikkim Power Development Corporation (SPDC) in monitoring implementation OF THE WELFARE ACTIVITIES IN THE PROJECT AREAS.

“The SPDC was categorically asked to provide details of constitution of the Project Level Welfare Committees for each project with the details of members, minutes of meetings of the committees, reports of committees and the Welfare activities undertaken. No such details could be provided to audit”, said the CAG.

The CAG also pointed out the absence of any mechanism to regularly monitor execution of projects and keep a constant vigil to see if any objects of value were unearthed during the course of execution of implementation.”There was thus , no deterrent in the existing system to prevent the developers or any of their employee/contractor from pilfering any precious materials that may be unearthed during the execution of the projects”, it said.

The report also exposes the lack of adequate experience among the SPDC officers in planning and execution of mega hydro power projects as detailed project of the mini projects of 1 to 2 MW capacity executed by the SPDC were prepared and vetted by either the IIT’s or the Technical Institutions of the Country.

Despite these facts, the technical soundness and economic viability of all projects below 100 MW (total 13 projects) awarded to IPPs were cleared by the SPDC for execution , the CAG said. This was the fraught with the risk of future non-performance , underperformance and non-viability , the CAG said.
The CAG also rejected the reply of the department as no evidence was furnished to substantiate the department’s claim.

CAG REPORT 2010 ON THE HYDEL PROJECTS IN SIKKIM - Part 2

While hundreds of crores of rupees in potential hydel power revenue washed down the rivers here due to an amateurish hydel policy on the part of the State government, the rich aquatic life in the Hilly State has also been hit hard by failure on the part of government and power developers.

In the report, the CAG highlighted the necessity to make adequate provisions in the environment plans for undesigning suitable measures to migrate the effect of hydel power projects on aquatic life of Sikkim. There are 63 species of Phytoplankton, 17 species of Zoo Phytoplankton and 48 species of fish inhabiting the river systems of Sikkim.

The creation of reservoirs, fluctuation in natural river discharge and diversion of river waters through closed tunnels would completely change the ecological conditions of the river systems.

“MoUs were needed to be signed with the project developers securing their commitments for a long term comphrensive strategy for preservation and protection of fishes and aquatic life in the river systems of the State”, the CAG said.

While in ten projects, the preservation measures were mainly alternative strategies which defeated the whole idea, the CAG pointed out that no provisions were made in the environment management plan of Chujachen and Bhasmey projects.

Teesta State V Project commissioned on March, 2008 has failed too on this count. About 23 Kms of Teesta river between the dam site and tail end of this project was direct through tunnels in the projects.

“The fish species and other aquatic organisms along with stretch of rive thus already suffered possible damages due to the changes in the flow of water”, the CAG said in a report.

The CAG also said that the catchment area treatment plant for the power projects were prepared without taking into account the field requirement for survival of the plantations and were therefore , aribitary and inadequate . It also rejected the reply of the State Forest Department on the issue accussing the department of not ensuring adherence to the plans to the prevalent norms.

The CAG also placed that the environment management plans for the projects had been prepared through assessment of secondary data without diligent study, observation and research of prevailing ground realities ove ran adequate period of time.

The State Pollution Control Board (SPCB) jas also been found wanting by CAG for failing to identify specific locations for dumping excavated materials from the project sites. Thus there was indiscriminate disposal of muck by the developers causing degradation of land, air and water, it said.

The CAG has provided the finding of the State Mines and Minerals Department which reveals gross negligence by NHPC in disposal of muck generated from the execution of Teesta State V project. Spoils were thrown along the river banks raising the river bed of the Teesta leading to change in flood behaviour of the river , acceleration of toe erosion and degradation of the overall geo-environmental setting in the area, the report said.

“In case of another project (Panan HEP), the sites identified for disposal of much was too small to retain safely the huge quantity of muck which could lead to future disaster such as enhanced siltation of reservoirs if the downstream projects, toe erosion and change in the geo-environmental setting of the downstream areas”, said in a CAG report.

CAG REPORTS 2010 - undue favoritism to Gati Infrastructure

The CAG has censured the State Government for showing undue favoritism while awarding three hydro power projects to GATI Infrastructure Ltd (GIL) which led to losses in crores of rupees to the State Exchequer.

The Agreement with the GIL for the award of three projects were unduly skewed in favour of GIL thereby resulting outright losses of Rs 22.17 lakhs towards the processing fees, unnecessary loan liability of Rs 3.68 crores (puls interest) borrowed from road construction, loss of Rs 21.7 lakhs per year on penalty in the event of delay in commissioning the projects, loss of Rs 1.32 crores per year towards environmental cess and loss of Rs 17 lakhs incurred by the SPDC on investigation studies for the three projects, the CAG said.

The State Government had signed an agreement with GIL on November 2003 for development of three hydro power projects in Sikkim-Sada Mangder (63 MW), Chujachen (57 MW) and Bhasmey (32 MW). The installed capacities of these projects were later enhanced to 71 MW, 99 MW and 51.7 MW respectively.

Later, the State Government signed 18 agreements with other developers between July 2005 and December 2008 for developing hydro power projects. In these agreements, the State Government imposed wide range offing conditions including processing fees and penalty charges.

None of the above conditions were imposed on GIL, the CAG said th. Besides, the State Government expressly agreed to provide access roads to all the three projects sites of GIL at its own costs and entered into a loan agreement with GIL through the Sikkim Power Development Corporation for availing loan of Rs 4.2 crores to be utilized for construction of approach road to power house for its Chujachen project, said.

In response, the department informed that certain extra incentives were given to GIL with a view to attract other developers as it was the first independent power producer (IPP) to venture in the State.

“The reply was not acceptable as the discrepancy was due to non-existence of hydro power policy and absence of any standard terms, conditions and criteria of the projects to IPPs”, the CAG said.

HYDRO POWER PROJECTS WERE AWARDED AT THROWAWAY CHARGES : CAG

HYDRO POWER PROJECTS WERE AWARDED AT THROWAWAY CHARGES : CAG

‘Astronomical loss in potential revenue due to absence of defined hydel policy’

The white paper tabled in the Assembly in July last year had indicated that the State Government itself of taking a ‘piecemeal approach’ while unleashing ‘bolt from the blue’ to the clueless Sikkimese people on the hydel thrust, the CAG has translated this ‘institutional failure’ into a financial haemorrhage , the quantum of which runs into hundreds of crores of rupees at the cost of the exchequer-all due to ‘absence of firm and defined policy’.

In its report for the year ended 31 March 2009 which was tabled in Sikkim Legislative Assembly today, the CAG said that the State had neither finalized its hydro power policy nor prepared a time bound plan till date for the implementation of 35 hydel power projects indentified with an aggregate installed capacity of 5,741.2 MW in Sikkim.

Barring Rangeet Stage III (60 MW) and Teesta Stage V (510 MW) which had been commissioned already , thirteen power projects are at various stages of process while 8 projects are yet to make any progress as of September 2009, the CAG said.

“Absence of a firm and defined policy and a definite plan led to inconsistency in awards of projects and lack of well thought revenue model resulted in loss of potential revenue”, said the CAG in its report questioning transparency in award of the power projects.

Open advertisement and dissemination of information was not done and instead all the projects, irrespective of the size were awarded by the State Government through the MoU route without calling for bids, the CAG sobserved.

“Despite considerable hue and cry in the State regarding the methodology adopted for the award of the projects, the Government has not notified the details of potential available, modality for the award of projects, technical capability, financial strength and experience of IPPs (Independent Power Producers) chosen etc to the public”, the CAG said.