Power Department of Sikkim OR Sikkim Power Department
SPECIFIC TERMS & CONDITIONS OF THE STATE GOVERNMENT FOR DEVELOPMENT OF HYDRO POWER PROJECT UNDER PRIVATE SECTOR FOR PROJECTS ABOVE 25 MW
  1. Presently, projects of capacity 25 MW and above are only allotted to Independent Power Producers for development. The projects below 25 MW are to be developed by SPDC/Energy & Power Department.
  2. Royalty at the rate of 12% of net energy would be charged for the first 15 years. Beyond 15 years of operation a royalty of 15% of net energy will be made available to the Government of Sikkim free of charge by the developer. 1% additional free power also has to be provided for local area development.
  3. The RGGVY Scheme allows the State Government to have financial allocation in the form of 90% grants and 10% loan. The Company shall bear the 10% (Ten Percent) share of the State Government within the surface distance of 2.0 Kilometers from the project site, as per the Hydro Policy 2008 of the Government of India. The expenses borne shall form part of the Rehabilitation and Resettlement Policy of the project.
  4. Government shall impose an Environment Cess @ One paise per unit of electricity sold and shall be collected at source for the amount of electricity generated by the Company and sold to its customers.
  5. The projects are allotted on BOOT basis i.e. Build, Own , Operate and Transfer. The projects shall be offered for a period of 35 years from the date of their commercial operations at the end of which they shall be reverted back to the Government of Sikkim at free of cost in good condition or extend further on mutually agreed terms as per decisions of the Government of Sikkim.
  6. Sale of Power shall be the responsibility of the IPP.
  7. The IPP shall be responsible for laying transmission lines for connectivity to the nearest Grid Sub-station of the State Government at the appropriate voltage. However, if the State Grid System is not adequate to transmit this power outside the State, the IPP has to make its own arrangements to connect to the nearest Grid Station of Power Grid Corporation of India Ltd.
  8. The SPDC/Govt. Of Sikkim shall have the option to invest minimum 26% by way of preference share in the total equity in projects above 100 MW and 11% in projects below 100 MW capacities.. The IPP shall arrange the funds required by the SPDC/Government of Sikkim to invest towards their share of equity in the project, which shall be repaid along with the agreed rate of interest from the sale proceeds of the free power.
  9. The IPP shall have to enter into an agreement with the State Govt., within a period of 180 Days from the date of issue of the “Letter of Intent”, if the IPP finds the project viable.
  10. The IPP shall deposit non-refundable processing fee @ Rs. 10,000.00 per MW of the installed capacity by a Demand Draft in favour of the Secretary, Energy & Power Department, Government of Sikkim within a period of thirty days from the date of issue of the “Letter of Intent”.
  11. The IPP shall have to pay wheeling charges in the event of using infrastructure facilities of the State Government. The wheeling charges shall be as determined by the competent authority.
  12. The IPP shall not be permitted to transfer the project or sell the project to others without prior permission of the Government of Sikkim.
  13. The IPP shall achieve the financial closure within a period of 12 months from the date of agreement. In the event that it is confirmed as impossible or impractical to achieve Financial Closure or if the Financial Closure is not achieved on or before the expiry of twelve (12) months from the effective date, for the reasons other than those attributable to the Government, the Government reserves the right to terminate the Agreement.
  14. The IPP shall commission the project within a period of 48 to 60 (varies according to size of project) months from the date of financial closure. In the event of failure on the part of IPP to commission the project within the targeted period, the IPP shall be liable to pay a penalty @ Rs. 10,000.00 (Rupees Ten Thousand) per MW per month to the Government of Sikkim.
  15. The IPP may surrender the allotment of the project back to the Government of Sikkim if on completion of the DPR within the stipulated time frame; it has grounds to establish that the project is not techno-economically viable. However, on such surrender, the Government of Sikkim shall not compensate towards expenditures incurred by the IPP.
  16. In the event of stoppage of construction on the main Project components by the developer, for a period of more than twelve months for reasons not covered under Force Majeure and for reasons attributable to the developer and/or abandonment of the Projects by the developer, the Government shall, after giving due opportunity to the developer to resume the work, have the right to terminate the Agreement. In the event of termination of the Agreement under this clause, the Government shall have the option to take over the Project.
  17. The jurisdiction of the project shall be the Court of Sikkim.
  18. The State Government shall acquire the land required for the project at the cost of the developers and lease out the same to the developer. T he IPPs are required to pay service charge/facilitation fee to the Government @1.5% of the total cost of the compensation.
  19. Government shall constitute a multi disciplinary Monitoring Committee to monitor the issues arising during the implementation of the project.
  20. Government shall constitute a Project Level Welfare Committee to look after the welfare of the Project Affected People.
  21. Government shall provide Police protection to the Company, its assets, its personnel and its representatives and also establish a Police Post to maintain law and order in the Project Areas for such period as may be requested by the Company and the Company shall bear the establishment, operation and maintenance cost on this account.
  22. The Company shall carry out the Environmental Impact Assessment (EIA) Studies and prepare Environment Management Plan as required under the Environmental (Protection) Act, 1986, and obtain the consent of State Pollution Control Board as well as Ministry of Environment & Forest, Government of India.
  23. The Company shall provide employment to one member of each of the displaced families or adversely affected as a result of the acquisition of land for the Projects covered in the Rehabilitation Plan.
  24. The Company shall take appropriate steps, as may be required, for the protection of fish culture as per environmental requirements.
  25. The Company shall be fully responsible for any damage or loss arising out of the construction, operation or maintenance of the Projects to any property or person.
  26. The company shall not name/rename any of the locality in the vicinity of the project area. In case the company desires to name a locality, then it shall request the Government, which shall, decide on a name in accordance with the local culture and tradition. The company shall also ensure that the buildings in its project are constructed reflecting the Sikkim’s traditional style of buildings.
  27. The Company shall provide business and contract opportunities to the local bonafide residents of Sikkim according to their capability and strength except the major contracts for tunneling, dam, power house, surge shaft, electro-mechanical, hydro-mechanical and supply of construction materials, etc. Place of tendering for works such as approach roads, quarters, colonies, buildings other than power house shall be the project area and preference shall be given to the capable local contractors so that the local people get benefits from such works of the project.
  28. In case any existing facilities including, but not limited to, irrigation systems, water supplies, road, bridges, buildings, communication system(s), power systems and water mills are adversely affected because of the Implementation of the Project, the Company shall be responsible for taking remedial measures to mitigate such adverse effect. The cost of the above remedial measures shall become a part of the Project Cost. Such facilities shall be as mutually identified and agreed upon between the Company and the Government. The Company shall not interfere with any of the existing facilities till an alternate facility, as identified, is created”.
  29. The Company as well as its contractors shall ensure that all the unskilled/skilled manpower other than executives as may be required for implementation of the Project shall be recruited through Employment Cell under Department of Personnel, Government of Sikkim, Gangtok, Sikkim. Whenever the Employment Cell to whom the vacancies have been notified in pursuance of the provisions of this Clause of the Agreement, fails to sponsor suitable candidates and confirms in writing for the posts so notified within four weeks of receipt of the request, then the Company may resort to other modes of recruitment on a temporary basis till such time the local manpower is available.

    The Company shall ensure that import of labour from outside the State is made in a limited manner. Such labour should be of Indian origin only. Those that are brought in shall be examined medically and registered with the local authorities for a period not beyond 6 (Six) months after the commissioning date of the Project. The Company shall furnish list of names of non-Sikkimese persons engaged in the project, who will require restricted area permit from the Government of Sikkim to work in the Project specifying the nature of works and particulars. Whenever they would leave the project permanently, it shall be obligatory for the Company to intimate of such fact to the State Government along with particulars of replacements, if any. The Company shall liaise with the State Government in all such matters and shall allow the District Authorities or Officers of the concerned Departments to make inspections of the project site, relevant registers, books, etc. for the purpose.
  30. Subject to availability, security, safety, law and order and operational factors being met, the Company shall permit free use by the Government and the general public of all service roads constructed and maintained by it for the Projects after they have been commissioned. Other facilities like hospitals, post offices, schools, etc. shall also be extended to the local public as per the guidelines of the Company in this regard based on the objective of providing such facilities.
  31. The Company shall ensure such minimum flow of water immediately downstream of the weir/barrage/dam for downstream requirements as specified in the environmental clearance.
  32. Labour Cess under the provisions of “Buildings and Other Construction Workers’ Welfare Cess Act, 1996, shall be recoverable from the Company