CAP demands clarity & transparency on State’s decision for Sikkim Urja Ltd disinvestment

GANGTOK,: The CAP Sikkim has sought clarity from the State government for the reported cabinet decision to disinvest Sikkim Urja Ltd which operates the now-defunct 1200 Mw Teesta-III hydel power plant in Chungthang.

“Citizen Action Party-Sikkim is highly concerned with the sudden and a hurried decision of the State Cabinet to disinvest one of the biggest power utility company of Sikkim, the Sikkim Urja Limited,” said party spokesperson T.R. Nepal in a press statement on Tuesday.

“We are equally disturbed by the timing of the sell-out decision on the shares of the Government of Sikkim-owned Sikkim Power Investment Corporation Limited (SPICL) and wish to express our deep concern and anguish especially considering the high economic implications that might arise on the State of Sikkim, which is already reeling under heavy economic downturn,” said the CAP Sikkim spokesperson.

Nepal expressed that the decision for complete sell out of the State asset of this magnitude of Rs 13,965 crores warrants critical examination, considering all aspects of project revival, option for complete takeover by the State government.

The Teesta-III hydel power plant, constructed at a staggering cost of around Rs. 14,000 crore, is presently defunct after its dam was washed away during the flash flood last October.

“It is understood that Sikkim Urja Limited remains fully insured, with a total sum assured of Rs 11,400 crore, and the insurance claim is already under process. However, the complexity of the claim demands careful attention by the stakeholders.”

“Whereas Sikkim government being the majority shareholder with 60.08% share, insurance compensation, is also likely to be in line with its shareholding. Therefore, going by valuation of total project cost, compensation equivalent to its shareholding works out to Rs 8,228 crore. Therefore transfer of government owned SPICL shares to M/s Greenco energy pvt. Ltd. even before settlement of the insurance claim, will completely relinquish rights of SPICL in favour of private company M/s Greenco Energies Private Limited (GEPL),” said the CAP Sikkim spokesperson.

Further cessation of power generation by Sikkim Urja Ltd will also impact the capacity of the government to generate much needed revenue and push Sikkim under further financial strain, leading to substantial loss of potential income, added Nepal.

“Therefore, the options and strategies that were adopted and explored by the State government before concluding to decide on the option for divestment of the State's assets have to be disclosed. Also, whether the loss assessors and financial consultants were deployed for arriving at the Cabinet decision, it has to be disclosed for us to have a thorough assessment and deliberation in the matter.”

“Whereas, in absence of clarity as above, it us natural that the Citizen Action Party has doubts on the economic wisdom of the current dispensation in arriving at a decision to sell its stake in a fully insured project which has a long term potential to generate Y-O-Y revenue for the state of Sikkim,” said the party spokesperson.

Nepal said the CAP Sikkim calls for an independent review on the disinvestment process, including the methodology adopted for valuation of the project and economic impact that is likely on revenue generating potential of Sikkim State.

“Also, CAP-Sikkim strives for a prosperous, sustainable, and inclusive Sikkim and shall always remain fully committed to safeguarding the interest of Sikkim and welfare of Sikkimese citizens. Keeping in view our policies, ideology, promoting transparency and accountability, we respectfully urge the government of Sikkim, to address the aforementioned concerns promptly and come out with complete transparently in the matter,” said Nepal.