Parliamentary panel notes 345% cost overrun in NHPC's Subansiri project, seeks tighter monitoring
New Delhi, August 9
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.
"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.
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.
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
Reader Comments
While cost overruns are concerning, we need to understand the context. The NGT stay and local agitations were significant hurdles. But 20 years for a project that should have taken 6-7 years? Something is deeply wrong with our project planning and execution. The quarterly monitoring framework recommended by the panel is a good first step, but implementation is key.
This is what happens when bureaucracy and political interference derail infrastructure projects. Meanwhile, China builds massive dams in record time. We need to seriously rethink how we manage mega-projects. The people of Northeast deserve better - they've been waiting for this power project for two decades! 😞
As someone who works in project management, this is a textbook case of scope creep combined with regulatory uncertainty. The recommendation for a Secretary-level monitoring group when variances hit 20% is sensible. But honestly, by the time a project hits 20% variance, it's often too late - they should start monitoring at 5-10% variance levels.
Living in Assam, I've seen the protests and environmental concerns around this project firsthand. While the cost overrun is worrying, we also need to ensure that this dam is safe for the environment and the communities downstream. We need a balance between development and ecological security. Let's hope NHPC learns from this experience.
Classic Indian PSU story. I remember when the Eastern Dedicated Freight Corridor was being built, similar issues of cost overruns and delays. The problem is systemic - clearances take forever, contractors handle multiple projects, and there's no real accountability. The Parliamentary panel's report is useful but only if the government actually implements it.