A Parliamentary panel raised concerns over a 345% cost overrun in NHPC’s Subansiri Hydroelectric Project, with costs soaring to Rs 27,948.52 crore from Rs 6,285.33 crore. It has recommended tighter monitoring of such power projects.
A Parliamentary Standing Committee has raised concerns over a nearly 345 per cent cost overrun in NHPC’s 2,000 MW Subansiri Lower Hydroelectric Project located on the Assam-Arunachal Pradesh border and recommended tighter monitoring of power projects facing high cost or schedule increases.
The Committee on Public Undertakings, in its 31st Report examining NHPC Limited, said the anticipated completion cost of the Subansiri project has increased to Rs 27,948.52 crore from the original Cabinet Committee on Economic Affairs (CCEA)-approved cost of Rs 6,285.33 crore.
Subansiri Project: Background and Delays
“The most severe case is the 2,000 MW Subansiri Lower HE Project, whose estimated completion cost of Rs 27,948.52 crore represents a 344.66% overrun over the original CCEA-approved cost of Rs 6,285.33 crore,” the Committee said.
Subansiri Lower is a large hydroelectric power project being developed by state-owned NHPC on the Subansiri river in Assam and Arunachal Pradesh. The project was approved in September 2003, and construction began in January 2005. It is designed to generate 7,422 million units of electricity annually.
The cost increase has also pushed up the expected price of electricity from the project. Its levelised tariff, or the average cost of electricity over the project’s tariff period, has risen from Rs 1.93 per unit to Rs 7.49 per unit, according to the report.
NHPC told the Committee that the project faced prolonged delays due to several factors, including local agitations, stoppage of work and a National Green Tribunal stay. Construction resumed in October 2019 after remaining affected for several years. Additional works, the COVID-19 pandemic and adverse environmental events also contributed to delays, the report said.
Parliamentary Panel’s Recommendations
The Parliamentary panel acknowledged that external factors contributed to the delays but said the experience showed the need for improvement in project monitoring, stakeholder management and coordination over clearances. It recommended that the Ministry of Power introduce a quarterly monitoring framework for projects where schedule or financial variations reach 20 per cent, with such cases taken up by a Secretary-level monitoring group.
“The Committee, therefore, recommend that the Ministry of Power institute a proactive quarterly optimisation framework for all projects where schedule or financial variances reach 20%, facilitating strategic elevation to a Secretary-level monitoring group,” it said.
The panel also recommended a comprehensive evaluation of the changes in the Subansiri project’s timeline to identify lessons that could help speed up other ongoing and future projects.
Other NHPC Projects with Overruns
The report noted that three NHPC projects were facing time and cost overruns, with Subansiri recording the highest cost escalation. The other two are the 500 MW Teesta-VI project and the 120 MW Rangit-IV project in Sikkim.
NHPC is a Navratna central public sector enterprise under the Ministry of Power and is primarily engaged in developing and operating hydroelectric power projects. (ANI)
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