The Himachal Pradesh government has imposed a penalty of Rs. 280.69 crore ($60 million) on Dutch firm Brakel Corp for delaying the implementation of a multi-million dollar hydropower project in the state.

“We have decided to impose a penalty of Rs. 280.69 crore on Brakel for delay in the execution of the hydropower project by over three-and-a-half years,” Chief Secretary Asha Swaroop told IANS.

The State government had signed an agreement with Brakel on November 25th, 2008, two years after the 960 MW Thopan-Powari-Jangi project was awarded to the Dutch company, for starting the pre-construction activities.

The allotment was cancelled October 7th this year by the Himachal Pradesh High Court on a petition filed by Reliance Infrastructure, one of the bidders that lost out to Brakel.

According to government officials, the delay in executing the project has caused financial loss to the state, which would have got free power from the project had it been implemented.

“The amount of penalty is equal to the upfront premium and the interest (for the delayed payment of an instalment of the upfront premium) that Brakel had deposited with the government,” Ms. Swaroop said.

The government, as per the state power policy, is entitled to get 12 percent free power from Brakel.

If the Thopan-Powari-Jangi project in Kinnaur district starts generating hydropower, the government is entitled to get an annual free power worth Rs. 250 crore.

After the high court cancelled the allotment, the government has decided to re-advertise the project.

The state has also decided to issue a show-cause notice to Brakel, asking why a penalty should not be imposed on it for causing financial loss to the government.

The project requires an investment of more than Rs. 6,000 crore.

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