Brakel refutes Himachal government charges on power project

August 14th, 2008 - 11:36 pm ICT by IANS  

Shimla, Aug 14 (IANS) Brakel Corp NV of Netherlands, which has been allotted a multi-million dollar controversial hydro power project in Himachal Pradesh, has replied to the state government’s show-cause notice, clarifying its financial status and credentials, a government official said Thursday. Sources in the state power department told IANS that Brakel in its reply has expressed surprise over various issues raised by the government despite clarifying its credentials to the government a number of times.

The state government sent a 12-page notice dated July 19, asking the company to explain why the allotment of the Thopan-Powari-Jangi hydro power project in Kinnaur district, 300 km from here, to the company should not be cancelled.

The decision to issue the notice to Brakel was taken by the state cabinet at its meeting July 7.

The notice cited vigilance probes, which had raised serious doubts about the capabilities of the company to execute the project that requires an investment of more than Rs.40 billion.

The state power department told IANS that the government has observed that Brakel had got the project allotted by misrepresentation of its technical and financial strengths.

The company in its reply regarding the government’s contention that a new firm, Brakel Kinnaur Power Private Ltd, was floated last year to develop the project without informing it, said: “We had intimated your office (power department) dated Jan 16, 2007, of our proposal to have incorporated Himachali domicile Indian equity (special purpose vehicle) for the implementation of the project”.

The company cited various government documents in its reply to substantiate its claim that the state government had knowledge about the new company.

It cited, among others, a clearance report from the state irrigation and public health department to Brakel Kinnaur Power Private Ltd for use of water rights at the site of the project.

Regarding the government allegation that the decision of Brakel to transfer 49 percent equity in the company in the name of Gujarat-based Adani Power Ltd without its approval was questionable, the company replied that “we have only identified Adani as a partner to hold 49 percent equity in the project, but it would be made partner after the approval of the government”.

“As we have made it clear during bidding and in our correspondence that Brakel is a special purpose vehicle (SPV) and not holding any equity in its name. In SPV, the equity is distributed among the partners and not by the SPV itself,” the company replied.

Brakel, in its reply, also cited a number of missives written to the government in which it had clarified that it was fully ready to execute the project.

The company claimed that it had even provided letters to the government last month written by its consortium, including Standard Chartered Bank, Halcrow, Energy Infrastructures Overseas Ltd and Eco Securities, confirming their equity participation in the project.

Brakel’s top official in Shimla B.R. Gautam, when asked whether the company has submitted its reply, refused to comment, saying “we are confident of starting the project execution by first quarter of 2009″.

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