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.