Sikkim chief minister Prem Singh Tamang (Golay) on Monday said the previous SDF government had pumped in around Rs 2,700 crore in the Sikkim Urja Teesta–III hydel project that was washed away in the October 4 flash flood.

The Sikkim chief minister alleged that initial processes to set up the state's largest hydel project were flawed.

“On February 22, 2005, the Sikkim state cabinet decided to award the project to APGENCO, which was a consortium of eight companies. However, four days later on February 26, 2005, the letter of intent was issued to Athena Projects Private Limited (APPL) without any cabinet approval,” said Golay.

APPL was part of the consortium.

Pawan Chamling’s Sikkim Democratic Front was in power from 1994 to 2019.

“The project was given to the APPL but had neither the technical nor the financial ability (to execute the project) and the Sikkim government did not vet credentials,” said Golay.

Teesta Urja Limited, a special purpose vehicle, was incorporated for the project.

The 1,200MW project, estimated to cost Rs 5,700 crore, was ultimately completed in 2017 at an estimated Rs 13,965 crore.

“The cost escalation is questionable. If the NHPC could construct a 510MW Teesta V dam at a cost of Rs 2,656 crore, then questions are bound to arise at the (nearly) 14,000 crore cost for a 1200MW project,” said Golay.

The chief minister also said the Sikkim government pumped in funds to the project at a time when other investors were wary of quake-related issues after Sikkim's 2011 earthquake.

“The project was turning into an NPA (non-performing asset), investors were fleeing... but the Sikkim government decided to infuse funds and raise the stake from 26 per cent to ultimately 60.08 per cent,” said Golay.

In the process, the state government invested funds to the tune of Rs 2,700 crore borrowed from other financial institutions.

“As of March 31, 2023, the state government has an outstanding loan amount of Rs 2,898.97 crore and is also a guarantor for Teesta Urja’s loan of Rs 6,800 crore,” said Golay.

The chief minister added that the Sikkim government had paid between Rs 8.53 and Rs 10 per share in 2012 when the project was in construction. “This share price was fixed without an independent valuator. In 2021 we used an independent valuator and the shares in 2021 were valued between Rs 5.79 and Rs 6.12,” said Golay.

The chief minister said Athena sold its shares without telling the government.

“Even the construction is flawed. The Central Water Commission wanted the Teesta III dam as a concrete gravity dam but it was built as a rock-filled dam to save costs,” said Golay.

P.D. Rai, former Sikkim MP of SDF who has been speaking on the Chungthang dam issue on behalf of his party, the main Opposition in Sikkim, could not be immediately contacted by this reporter on these allegations. His phone was unreachable.