CHAPTER Vl

COSTS OF IHEP

The social and political disturbances generated by the project were

atready portrayed in the previous chapter. In this chapter attempt is made to

compile the costs associated with the project . This chapter is wganised under

two sections - Section A and €3. Section A covers Financial costs and Section 8

covers Economic costs.

SECTION A

FtNANCiAL COSTS OF IHEP

An attempt is made here to compile the financial cost of construction of

IHEP and to distribute the costs to the relevant pefiods.

6.2 ETHODOtOGY AND ESTMATiOCJ

The cost details of IHEP are colkcted mainly from the Completion

Report of ldukki Project maintained at Kerala State Electricity Board. The

Completion Report does not contain the Mails d the costs of the project for

calculating the expenditure far the third stage. Hence m p l e t e relianoe was

placed on the Annual Administration Reports of various years puMished by

Kerala Electricity Board (KSEB) to get the cost detaih of the third stage.

Administration Reports give data on the total costs. The administrstion reports

of various years give the annual physical progress of the work and also the total

expenditure incurred for the propct in each year. T b progrws reports related

to 1HEP gave details regarding the expenditure. Various recurds maintained at

188

KSEB w e referred to find out the yearwise wt of items like steel, cement,

skilled labour, and imparted equipment. The data maintained at the Accounts

Division of the Board gave information on the cost detaih of many items of cost.

For the imported items, cost is calculated in t m s of the import price converted

to Indian currency at official exchange rate.

The Abstract of the costs for the first stage is given in Appendix V1.1 The

yearwise costs are givm in Appendix V1.2. The total costs fw the Stage I is Rs

1 1500 lakhs.

For the first stage, the costs are spread from the year 7 962 to 1 986. The

peak construction activities w e going on in the years from 1969 to 1975 as

revealed by Appendix V1.2. The tatd constnlctm costs during this per'iad came

to Rs 7988 labs which canstituted 69.46% [(79881115W3)~100=69.46] of the

tatal costs for Stage I.

Similarly for Stage 11, the Abstract of costs are given in Appendix V1.3.

The total costs come to Rs 6700 lakhs. The yearwise costs are given in p'

Appendrx W.4. The maximum costs w e incurred during the period from 1983

to 1985. The total costs incurred during this pert% w s Rs 5599.1 1 lakhs which

constituted 83.6% [( 5599.1 116700 )x100 = 83.61 of the total costs.

Appendix W.. 5 presents the annual costs incurred for l dukki stage t l I.

The total costs come to Rs 1 51 7 . 4 4 takhs.

All initial expenditures which are not included in Appendix VI. 1 and Vl.2

are included in Appendix V1.6. The total compensation paid to evictees was Rs

7442857. Preliminary Investigation costs are not included in Appendix VI. 1 . The

figure for this comes to Rs 32.5 lakhs. The compensation given to Forest

Department was Rs 45 lakhs. The cost of plantation and care of avenue trees

and parks were Rs 40 lakhs and the capitalised cost of revenue by government

due to loss of revenue from agricultural land was Rs 6.88 lakhs(c,8).

Tabfe 6.1 presents the major future expenses that will have to be

incurred for the maintenance of the project and these are to be added along

with the capital costs.

Six generators of 1 3 0 W each mere installed in Idukki under tw stages

- the first set in q976 and the second , in 1986. Discussions with expefts and

the engineers at Generation Station of ldukki at Mulamattom yielded the

following information:

The technical Vie of generators is 25 years. If not renovated within this

time , emergency maintenance and this will have to be anticipated and provided

for. The emergency costs wit/ come to about Rs 500 lakhs per year. Renovation

studies, itself will cost about RS 35 lakhs per generator and this study w i H IE

spread over, say two years. The renovation dwrges will come to about Rs 2

mores pet W. Discussion with the engineers at KSEB, Head Quarters and

those at the Gemrating station showed that renovation studies for the first three

generators will start by 2005-2006- The studies for the new generators will start

in 2015-2016. The cashflow anticipated based on the &uve information are

given bebw in Table 6.1. These costs are capitatised.

The costs incurred for routine maintenance and transmission and

distribution are deducted from the benefrts of the project and hence are not

considered here. -. -

Source: Discussion with experts

It can be seen from Table 6.1 that the costs of maintenance will come to

a total of Rs 161210 by 2019 -2020. The msts for the various years can be

referred from table 6.1.

Table 6.2 gives the annual consolidated awts of the following items- (i)

the am-! oonsolidated costs for stage I , stage II and stage I11 (ii) the

anticipated major expendttures and (iii) renovation charges and the(iv)

preliminary costs. Items (11) and (iii) are capitalised.

""(cf, Table 6.1 ) ""**(cf, table W.6.1)

The costs incurred for routine maintenance and transmission and

distribution are deducted from the benefits of the project and hence are not

considered here.

6.3 LIMITATIONS

The data required belong to 1960. Moreover , data on preliminary casts

and information on the year of disbursement could not be located. Therefore

the disbursement amount was distributed over years on the assumption of

equal distribution over the years. The actual number of evictees and the total

amwnt of compensation disbursed wi! be actually much higher. But data was

available only for the compensation paid wt during the initial stages.

6.4 FINDINGS

The totaf m t incurred and the total costs anticipated upto 2025-2026 for

lHEP coma to Rs 1,81,151 lakhs. The total costs incurred up to 1999-2000 is

estimated to be Rs 19941 lama . The yearwise distribution UF these costs are

presented in TaMe 6.2

SECTION B

ECONOMIC COSTS OF IHEP

6.6 OWECTRIE

To estimate the economic cost of the lHEP

8.6 METHODOLOGY

The economic cost is derived by assigning economic values to certain

items of financial cost. Economic valuation is done for the following items of

cost.

1. Forest Land

2. foreign Exchange

3. Imported machinery

4. Steel

5. Cement

6. Unskilled labour

6.6.1 ECONOMIC VALUE OF SUBMERGED FOREST

In the financial analysis, the cost of forest land submerged is given as

Rs 45 lakhs. This is the amount of compensation that was paid out to the

Forest Department by KSEB. But when one conducts economic valuation, one

has to take into consideration the loss of forest extending to the future periods

and the benefits that would have been derived from it. So those factors are

taken into account in computing economic valuation.

According to the repoft on "Em restoration of Idukki Hydroelectric

Project", the total land used for the formation of reservoir is 57.76 Sq Urn out of

which 48.09 Sq Km IS forest land. The CESS study shows that the submerged

forest land mnsisted of wet evergraen, semi evergreen and moist deciduous

fully dense trees. According to the Government of India guidelines vide Letter

No: 1 1-61 \85\FRU (Cons) dated 1 3-1 46, valuation of forest is to be done on

the basis of the value of one hectare of fuHy stocked forest of density 1. This is

given as Rs 126.74 lakhs . The vatue is cafculated on the basis of revenue

awual for a period of 50 years. The discount rate taken is 10 per cent. The

vatue calculated relates to 1986. The equivalent of this at 2000 prices will be

Rs 361.31 lams [(126.74)x1020/357.8 =361.31, t26.74 and 1020 being the

whole sale price indices for all commodities for the years I986 and 1999-2000

respectively, at Base 70-71 = 100 ](c,f .appendix v? .103)].

In the new calculations, the discount rate taken is 5% . The reduction

in discount rate is effected on the principle of intergenerational equity. The

compounding factors for the accrual values at 10% and 5% for 50 years are

1163. 908529 and 209.347996 respectively (Reference 4 and 10). The ratio is

-1798663. Therefore the accrual value for 50 years of Rs 361.31 lakhs is Rs

64.9875 lakhs (361.3 1 x.. 7 798663 = 64.9875) .

Again when the accrual is considered as on 1999-2000, only, 38 years

had been elapsed from 1962. The accrual value for 50 years and 38 years at

5% are 209.3480 and t 07.709 respectively. Hence the proportionate m a l

value for 38 years will be Rs 33.4359 lakhs (M.9875 x 107.709/209.3480 =

33.4359 ). When we discount this to 1962, at 5%, this becomes Rs 5.23623

iakhs only.

Therefore the total value of 48.09 Sq Km ie 4809 ha of forest land comes

to Rs 25181 lakhs ( 4809x 5.23623 = 25181) . The wholesale price indims are

57.3 and 1 020 for 1 962 and 1 999-2000 respectively. Therefore Rs 251 81 ,

converted to 1962 prices will be Rs 1414.58 lakhs [ 25181~

(57.3/1020)=1414.58 j

6.6.2 VALUATION OF FOREIGN EXCHANGE

Foreign exchange is very valuable for a developing country like India.

Although government has fixed an official exchange rate, the foreign exchange

had been valued very much higher by the citizens and that was very evident

from the havala trade. The Government had devalued Indian rupee twice - in

1966 and in 1991. Table 6.3 ,column 2, presents the exchange value of Indian

rupee against the daiiar for various years. In column 3, the percentage of

change over the previous year is worked out and presented. It can be seen that

the maximum change was in 1966 -1967 and in 1990-1991. This was due to

the fact that devaluations were done in 1966 and in 1991. By devaluation, the

government mad8 the official exchange rate at par with the havala rate. Still

there were fluctuations and the value of Rsldotfar increased from Rs 6.3542 in

1966 to Rs 24.5033 in 19991. The figures supplied by Reserve Bank of India,

Bombay is Rs 29.5033 for 1991 -1 992. The change in value of Rsldollar from

Rs 6.3542 in 1966 to Rs 29.5033 in 1991, corresponds to a compound rate of

growth of 7.220335%. This rate is applied to Rs 6.3542 (which is the rate after

devaluation , in 1966) and the values are estimated from the year 1 967 -1 968

applying this rate. For the years preceding 6647, the rate Rs 6.3542 is

discounted with 7.228335% to get the economic rate. The rates wurked out are

provided in column 4. Column 5 supplies the ratio of the economic and official

exchange rates,which can be reffeted to as shadow foreign exchange rate

(shadow forex rate). - . - -- - - .

TABLE 6.3 - I

1 2 3 4

Change Economic value in % over derived by applying rate=Economic value of

Year RslUS dollar prevlous 7.228335% foreign exchangelmarket

year value

1 W1-1962 4.6 4 A824

1 I t I I 1 Source : (c, 6),R81, Bombay

6.6.3 ECONOMIC VALUATION OF STEEL

8.6.3.f ECONOMIC VALUATlON OF lkaPQRTED STEEL FOR PRESSURE

SHAFTS

Both imported and indigenous steel were used for the project. Steel was

extensively used in the propct. A part of the steel - substantial part of steel

used for pressure shaft - was imported from Canada, Switzerland and West

Germany.

Statement of expenditure on imports shows (c,Q) that in 1970, steel was

imported from Canada, West Germany and Switzertand and then again in 1973

from West Germany. The value of imports from Canada was given as 51 371 3

CAD which works out to be = Rs36,85,634 (513713~7.1745 = 36,85,634). The

imports from Switzerland and West Germany were given in Indian rupee. The

details are given in Table 6.4 provided below. The total value of imported steel

was Rs 53,87,306 .

Source: (c,9)

Table 6.4 shows that the total imports was Rs 36,85,634 from Canada,

Rs 7,91,297 from Switzerland and Rs 9,10,375 from West Germany.

Report on the second revised estimate of the project gives an additional

item of cost (c,9 ) viz., steel pjates and specials and fabrication of steel liners

for Pressure shafts. The steel used for the pressure shaft is of premium quality.

The expenditure far this is Rs 1,54,28,000. The quantity of material used was

4254.20MT. This is the actual quantity used (quantity and amount is

periodically assessed to revise the estimates). The actual cost of imported

steel thus comes to Rs 53,87,306 .

The steel other than the imported steel is considered as indigenous.

Hence the value of additional steel purchased and from the domestic market

\was Rs 100,40,694 (1,54,28,Ml0 - 53,87,306 = 100,40,694). The yeanvise

~ p l i t up is not given. The costs come within the item Pressure shaft - item

qo: 10 in the Appendix V1.2 The cost is apportioned between 1971 to 1975 in

~roportion to the amount spent for pressure shafts (d,Table 6.5).

Table 6.4 i

COST OF IMPORTED STEEL (Rs)

Year

1 969- 1 970

1 972-1 973

Total

Cost of steel from

W Germany

781 125

129250

910375

Cost of

steel from

Canada

3685634

3685834

Total

5258056

129250

5387306

Cost of steel

from

Switzerland

791 297

791297

TABLE 6.5

ECONOMIC VALUE OF 1NDlGENOUS STEEL USED FOR PRESSURE

SHAFTS

The details of indigenous steel, other than the steel used for Pressure shaft is

given in the first column of Table 6.6

Details of the domestic price, import price, import duty and excise duty of steel

7

""Econo

mic value

of foreign

exchange

-

I .I 151 15

1.20321

1.256873

1.352246

1.38595

6

Equivalen

t import

price

(4)*(5)

-

11 7.031 8

130.4145

192.1069

30.41 91 7

40.14047

are supplied in Table 6.6.

8

Economic value

of steel purchased

indigenously

(8 )~ (7 )

130.5036

156.91 61

241.453ti

41 ,1342

55.8327

625.640E

4

Expenditur

e on steel

- Excise

duty

20.72872

23.09815

39.32227

8.701 55

4.91 8657

3

"Excise

Dutyl(Do

mestic

price

+Excise

duty)

0.042553

0.038482

0.033613

0.031 008

0.029851

1

Year

1971

1972

1973

1974

1975

TOTAL

5

***import

price

/domestic

price

5.645876

5.429415

4.72123

3.387435

7.91 7253

2

*Expendit

ure on steel

21.65

24.02

40.69

8.98

5.07

100.41

I TABLE 66 I t DETAILS OF PRICE AND DUTIES OF STEEL

c price

Year

I I I I

Source: *(c, 1 O), Records of KSEB

***lmpo~

Duty

*Domes

tic Price

in

Excise

Dutyl(Dom

estic price

+Excise

duty 1 (5)4(2)+(5)1

Import

Outyl(lmpo

rt Price

+import

duty)

**Import

Price

" Record set the Office of Commissioner of Custom's House, Island,Uachi

Import

price

/domesti

***Excise

Duty

The doriestic price and the import price given are exclusive of Excise

Duty and Import Duty respectively. It is seen that the international price was at

least 1.3 times higher than the domestic price and in 1976 it rose up to even

56.4 times. There was born in the international trade in 1971, 76 and 77.

With this background information and also with the information on the

ratio of economic price to domestic price, the economic evaluation of steel can

be attempted. The evaluation indigenous steel and imported steel is made

separately.

6.6-3.2 ECONOMIC VALUATION OF INDIGENOUS STEEL

6.6.3.2.1 Valuation of indigenous steel used Mr purposes other than

Pmssure Shaft.

The economic prices for the indigenous steel used for pressure shaft

and for other constructions are worked out separately.

The indigenous steel used is valued on the basis of import costs to find

out the economic value. The rationale of this is that the use of indigenous steel

for the project resulted in imports and India lost foreign exchange on this

account,, The economic prices of indigenous steel is estimated by first

deducting the excise duty from the expenditure on steel and the estimate is

given in Table 6.7. The expenditure given in Table 6.7 is the expenditure on

indigenous steel and that is inclusive of excise duty. Then this figure is

multiplied with the ratio between international price to domestic price. This is

again multiplied with economic forex ratio to yield the economic value. The

details are worked out and presented in Table 6.7 .

-- - - - - - . - - I - - - - - T A B L € ~ : ~ L-_ - - --- - -

I

ECONOMIC VALUE OF INDIGENOUS STEEL - I

i I 8

Economic

value of

steel

purchased

indigenous1

Y (6)x(7) 0.1 97012

0.809299

1.201 153

5.531 193

I i I I 1 1 I f

(Total 142.67 1 I 922.02291 1 - - 1 . - I i -- - - I

7

****Econo

mic value

of foreign

exchange

0.97444

1.188472

1 .OM585

1.1 63451

6

Equivale

nt import

price

(4)*(5)

0.202179

0.680958

1.095378

4.754128

5

*"*import

price

/domesti

c price

5.054485

5.23814

5.765147

7.428321

4

***Expen

diture on

steel -

Excise

duty

0.036571

0.1 f8857

0.1 72727

0.584948

3

""Excise

Dutyl(Do

mestic

price

+Excise

duty)

0.085714

0.085714

0.090908

0.086022

1

Year

1961-1962

1M2-1963

1963-1984

1984-1 065

2

""Expe

ndjture

on

steel

0.04

0.13

0.f 9

0.64

Source: *(Records of KSEB)

"(cf,table 6.6)

"(cf,table 6.3)

It can be seen from Table 6.7 that the total economic value added up to

Rs 922.002 takhs while the financial value added up to Rs142.67 lakhs. The

difference between the financial value and economic value for the respective

years can be seen from Table 6.7.

6.6.3.2.7 Valuation of indigenous steel used for Pressure Shaft

The indigenous steel used for Pressure Shaft is estimated and presented in

Table 6.8.

gource: * Records of KSEB, (c, 1 0)

TABLE 6.8

ECONOMIC VALUE OF INDIGENOUS STEEL USED FOR PRESSURE

SHAFTS

6

Equivalen

t import

price

(4)"(5)

117.0318

130.4145

192.1089

30.41 91 7

40.14047

1

Year

1971

1972

1973

1974

1975

f OTAL <

3

**Excise

Du tyl(Do

mestic

price

+Excise

duty)

2

*Expendi

ture on

steel

21.65

24.02

40.69

8.98

5.07

100.41

7

****Emno

mic value

of foreign

exchange

1.115115

1.20321

1 258873 ---- 1.352246

1.38595

8

Economic

value of

steel

purchased

indigenous

IY (6)x(7)

130.5039

158.9161

241.4539

41 .I342

55.6327

625.6408

4

*** Expen

diture on

steel -

Excise

duty

5

**"import

price

ldomesti

c price

5.645876

5.429415

4.721 23

3.387435

7.91 7253

0.042553

0.038462

0.03361 3 pppp

0.031 008

0.029851

20.72872

23.09815

39.32227

8.701 55

4.91 8657

"(cf ,table 6.6)

"*(dl table 6.3)

.From Table 6.8, it can be seen that the financial value is only

Rs 100.41 Lakhs while the economic value stands at Rs 625.86 lakhs . It is

seen that a substantial proportion of steel used was for Pressure shafts . The

financial cost of steel for other purposes added up to Rs 142.67 lakhs , while

that for Pressure shafts alone added to Rs 100.41 lakhs.

6.6.3.4 ECONOMIC VALUATION OF IMPORTED STEEL

Economic cost of imported steel purchased for Pressure shaft is

estimated by first dedu~ting the import duty from the value of imports and

then multiplying it with the economic value of foreign exchange.( Import duty is

only a transfer payment. So that is not taken into account in economic

valuation). The expenditure on steel given in the table is inclusive of import

duty , but not inclusive of transportation cost from port to project.

TABLE 69

ECONOMIC VALUE OF IMPORTED STEEL (Rs Lakhs)

L. - . - - 4 . - -.i - 1 -,-.A

$ource: *{Records at KSEB)

T(cf table 6.6)

1

Year

7963-1970

872-1 973

,total

2

"Expen

diture on

imported

steel

5258058

129250

5387308

3

import

Duty/(lmp

ort Price

+import

duty1

0.437 106

0.430S7

4

Expenditu

reimport

duty (2)[1-

(a)]

2991 279

73547.52

I

5

economic

value of

foreign

exchangjd

ornestic

value

1 .a37081

1 258873

6

Economic

value of

imported

steel

(4)"(5)

3102199

92439.80

, 3194838

"(cf ,table 6.3)

In the case of imported steel , the financial cost came to Rs 53,87,306

lakhs Mile the economic cost stood at Rs 3134,638. This is because of the

heavy import duty. The import duty constitutes almost half of the combined

import cost plus duty ( 43.1 1 % in 1969-1 970 and 43.10% in 1972-1 973).

In economic analysis, , first the financial expenditure on steel is

deducted from these costs. Then the economic cost is added back. The

financial expenditure on steal given in Table 6.7 does not include

transportation costs of the material from port to the project. Therfore the

transportation cost is rightly included in the economic values thus calculated.

Attempt is not made to estimate the economic value of transportation costs, by

assigning economic value to the diesel used up in the transportation.

6.6.4 ECONOMIC VALUATION OF CEMENT

India used to import cement. But for the construction of IHEP, only

indigenous cement was used. But while assigning economic value to cement,

the import value is used as the base. The economic rationale apptied in the

economic valuation of indigenous steel , is being applied in the case of cement

also. The details of price and duty of cement is supplied in Table 6.10.

The economic prices of indigenous cement is estimated by first

qeducting the excise duty from the expenditure on cement . The expenditure

qiven in Table 6.10 is the expenditure inclusive of excise duty. Then this

Ygure is multiplied with the ratio of international price to domestic price. This

value gives the equivalent import price. Equivalent import price is again

multiplied with foreign exchange premium to yield the actual economic value.

Import "i 1

Year Price ]

Price priceldo Duty Duty +Excise Rslton

mestic duty)

price (5)1[(2)+(5)1

2

*Domesti

c Price in

3

**Import

5

***Excise

4

lintemati

onal

import

6

****Import

7

Excise

Duty/(Dorn

estic price

"( Records at Office of Commisionor of Customs, Customs Office , Island)

The import duty constitute 38.8% to 52.8% of the total costs in various years.

Information given in Table6.10 is very vital for estimating the economic value of

the indigenous cement.

The economic valuation is given in the table that follows:

. . . . . - -

TABLE 6.11 - - - - - - . . . - . - - - - -

ECONOMIC VALUE OF INDIENOUS~CEMENT(RS ~akqs) 1

Year

8

Economic

value of

cement

purchased

i ndigmou

6

Equivalen

t import

price

(4)*(5)

7

Economic

value of

foreign

exchange]

market

2

"Expend

iture on

cement

4

Expenditu

re on

cement -

Excise

3

"Excise

Dutyl(D0

mestic

price +Excise

5

"import

price

/domestic

price

(V Source: *(c, 7)Rec

1 1 I I 1

3rd~ at KSEB

"(cf, table 6. 10)

"(cf table 6.1 0)

It can be seen that the financial value is Rs 1382.68 lakhs for all the

years together while the economic value is Rs 20,156.87 lakhs . This

difference as discussed earlier arises mainly because the valuation is based on

import prices and equivalent import prices are again adjusted for the economic

value of foreign exchange.

6.6.5 ECONOMIC VALUATnN OF IMPORTED MACHINERY

The details of the machinery for civil end electrical works are given

separately as Appendices V1 7 and VI 8 respectively. The consolidated value

of the importe d machinery is provided in Table 6. f 2

Fource: *(cf , Appendix V1.6)

t'(cf Appendix V1.7)

7972-1973

1 973- 1 974

1974-1975

TOTAL

1128926

886590

7791 52

18607319

3317043

54 1 583.9

657902.9

578191%

4445989

1428 1 84

1437055

78516515

7111492

357046

35Q263.7

19429fPQ

3334477

1071 138

1077791

57387388

1.250873

1.352246

4191013

1448442 -

I .385950 1493765

61 #5W7

The details regarding the machinery imported for civil and electrical works are

supplied below.

It can be seen that the total financial mst of all the machineries together is Rs

765,16,515 and the total economic cost of the same is Rs 615,05,507. The

economic value is higher by 53.25%. The duties come to 25% ( Registers of

Office of commissioner of customs, Customs House, Island , Ernakularn).

6.6.6 ECONOMIC VALUATION OF CONSTRUCTION TOOLS AND PLANTS

OBTAINED AS GFZANT

Tools and plants obtained as grant from Canada have not entered into

the financial costs . But the 25% duty paid as import duty has entered into

financial valuation. In economic valuation, the duties will have to be deducted

from the costs. Eventhough the imported items have not entered into the

financial costs, these items will have to be added in the economic costs. Then

the imported items will have to be revalued in terms of the eeconomic value of

foreign exchange.. So in economic evaluation , the tools and plants thus

obtained will appear as benefits. The details are given in Table 6.13 .

TABLE 6.1 3

CONSTRUCTION TOOLS AND PLANTS OBTAINED AS GRANT

Source: *(c, 9)

"RBI Bombay, (c,6)

" Office of Customs of Custerns Office ,Island

""**Econ

omic

value of

foreign

exchang

e

laconomi

c value

1 .I63451

1.247549

I. 149791

0.908467

0.970756

1.037081 ---

1.115115

I .20321

1.256873

1 -352246

YEAR ,

Emnomi

c value

of the

grant

959663.8

1061 535

1281 780

891 931.8

1 1841 23

1433553

1361502

161 3582

1 595840

1 782523

1 31 48034

Import

Duty at

25%

274947.5

283632.3

371 598

327266.3

406598.3

400765.3

1827936-1

447021.5

***Value

after

import

duty

824842.5

850890.8

1 1 14794

981 798.8

121 9795

1 382296

1220852

1341 065

*Amount

in CAD

dollar

RSlCA

D dollar

1 963-1 M4

423230.3

434M8

3838511 -

**Amoun

t in RS

4.8469

5

8.5507

5.7692

7.1677

-83 228

7.1745

7.8803

7.4609

7.659

226905.8

1289691

1 303404

11509534

1 099790

1 134529

1488392

1309065

1628393

-- 1843061

1788086

1692921

1 737872

15346043

1984-1 805

1 985-1 966

1966-1 967

1 967-1 968

"1 968-1 9$9

1969-1970

1970-1 971

1971 -1 972

1972-1 973

Total

228905.8

226905.8

228905.8

226905.8

226905.8 ----

226905.8

226905.8

226905.8

226905.8

2269058

It can be seen that in economic valuation , there is an increase of

benefits by Rs 131, 46,034 due to accounting the machinery obtained as

grant.

6.7 CONSOLIDATION OF ECONOMIC COSTS OF lHEP

The economic costs of IHEP Stage I and Stage It were worked out and

presented in Appendix V1 .I 1 . Appendix VI .I 1 does not include the adjustment

for the economic costs of forest land. Appendix Vl.ii is worked With the purpose

of illustrating how the economic prices worked out will affect the economic

valuation. It was during stage I and II ,that a large amount of imports took

place. According to Table 6.1 4, the ratio of economic cost to

financial cost = 1.59 (28992.9411 8208= 1 .59).The relationship between

the economic and financial costs for various years can be studied by

comparing the entries in the column (1) and column(21) for the respective

years.

In Table Vl.12 the economic costs of all stages of lHEP are estimated.

The first column lists out the combined financial costs and of all stages of

IHEP. The costs start from the year 1961-1962 and are projected to the future

till 20252026. In the first part of the chapter the economic values were

pmputed for steel, cement, imported machinery, unskilled labour and forest

lend . Economic value of machinery obtained as grant is to be treated as

qenefit. In short the costs of all the items for which economic costs are

qpmputed get deducted from the financial costs which appear in the column 1.

Then the economic costs are added back. This process is continued from

column (3) to column (19). In column (20), the economic value of machinery

obtained as grant is deducted . But for the machinery , import duty was paid

and these duties are aiready included in the Financial costs given in column

1 .This import duty has to be deducted. The results are presented in column

(22). The economic cost of unskilled labour is considered as 0. This is

deducted from the value arrived at in column (22). The financial value of the

forest is given in column (25) and the economic value is given in column (26).

The financial value of the forest is deducted from and the economic value of

the forest is added to in column (24), to finally arrive at the economic costs of

IHEP.

The final figures are presented in column (27) The total economic costs

come to Rs 199,513.1 lakhs While the total financial cost come to Rs 181 151

lakhs .The ratio between the economic and financial cost is equal to 1.10

[119513.11181151=1.10]

6,8 LIMITATK)NS

Economic prices of items like foreign exchange, steel and cement

ideally wwld have been computed at the Central Government's level and

supplied to Project Evaluators. But such estimates are not available with

Planning Commission.

6.9 FINDINGS

1. The valuation of forest land in financial analysis is Rs 45 lakhs, while the

same is RS 141 4. .58 lakhs.

2. The ratio of econmic value of foreign exchange to the financial value ranged

from 0.908467 ta 2. f 35278 . The values for the various years can be

referred from Table 6.3

3. The ratio between the economic value and financial value of of indigenous

steel is 6.5 ( 922.021142-67 = 6.5) (c,Table 6.7). The ratio between the

economic value and financial value of imported steel is 0.59 (

31 9463815387306 =O. 59)(cf,Table 6.9). These are the ratios between the

total figures.

4. The ratio between the economic value and finacial value of cement is 14.6

(20156/1382.68=14.6)( c,f Table 6.1 1).

5. The ratio betwen the total economic value and finacial value of imported

machinery is 1.53( 2865433311 869731 9=1.5). (cf, Table 6.1 2).

6. The total economic value of Stage I and Stage tI is Rs 28992.94 lakhs and

the financial value is Rs 18208 lakhs. The ratio is

7. Rs 1.59 (28992,94118208 =1.59). (cf, Table 6.14).

References:

1. Kerala State Electricity Board ,Eco restoration of ldukki Project, Report,

1980.

2. Centre for Earth Science Studies, Sudy of Human Elements of

Environmental and Ecological Impacts of ldukki Project, 1 984, p. 39.

3. Chandok H.L. and Policy Group, lndia Data Base, Living Media India Ltd,

New Delhi, 1990, pp.362-363.

4. Industrial Development Bank of lndia , Compounding and Discounting

Tables, Bombay,1981,p.10

6. . Governemnt of lndia , Economic Review, New Delhi, (various years)

7. Public Works Department, Government of Kerala, Rates of contract

,Trivandrum (various years).

g. Directorate General of Commercial Intelligence and Statistics, Trade

Statistics of Foreign Trade of India, Volume Il,lrnport,Calcutta ( various

years)

9. KSEB, Report on the second revised estimate, ldukki

Project,Trivandrum, 1976, pp. 1 16-200.

10. KSEB,Completion Report, ldukki Project, Stage 1 and Stage tI , Trivandrum,

1998

1 1. KSEB , Annual Administration Reports (I 975-76 to 1 998-200O),Trivandrum

12. ~ ~ ~ 8 , l d u k k i Hydroelectric Project in Periyar Basin , Trivandrum, Volume 1,

1970.

Sources Consulted:

1. Ofice of the Chief Engineer (Load Despatch), KSEB, Kalamassery

2. Ofice of the Chief Engineer (Generation), KSEB, Mulamatlorn

4. Office of Chief Engineer (Commerce and Tariv, KSEB, Trivandrum

5. Office of the Chief Engineer (Planning), KSEB, Trivandrum

6. Office of Commissioner of Customs ,Customs House, Island, Ernakulam