This is a case study and analysis on the Dulhasti Dam Power Plant Project in India. It highlights those areas which experienced the big hits in the cost estimation procedures and what steps did the Indian Govt. take in order to sustain the budgetary perspective and complete the project.

1. Dulhasti Power Plant Project
Abstract
Begun in 1985, the Dulhasti power
project set in the northern Indian
provinces of Jammu and Kashmir, is
a renowned example of a disaster
in project cost estimation and
delivery.
During the inception stage, the
project’s cost was estimated to be
1.6 Billion Rupees (about $50
Million). By the time the contract
was let, the cost estimates had
risen to 4.5 Billion Rupees and later
it rose to 8, 11, 16 and 24 Billion
Rupees (nearly $750 Million). Till
2004, the project was not
completed, although well over $1
Billion was spent, just pursuing it.
This study and analysis highlights
those areas which experienced the
big hits in the cost estimation
procedures and what steps did the
Indian Govt. take in order to
sustain the budgetary perspective
and complete the project.
Karthik Murali | EMGT 709
Western New England University
March 2nd, 2013
karthik.murali@wne.edu

2. Case Study – Dulhasti Power Plant Project
Contents
Contents ......................................................................... 1
Summary......................................................................... 1
The Challenges................................................................ 2
Initial Challenge .............................................................. 3
Political Issues................................................................. 3
Geographical Issue ......................................................... 5
Project’s Frontier ............................................................ 6
Conclusion ...................................................................... 8
Appendix – Figures & Images ......................................... 8
Bibliography.................................................................... 9
Summary
The idea of the project was a very straightforward concept.
Dulhasti was designed as a 390MW hydroelectric power plant
to be built on Chandra River, which is a swift-flowing tributary
of the Chenab River in the Doda region, a rugged, mountainous section of the Himalayas, and
several hundred kilometers form larger cities.
The project dealt with,
1. Building a dam
2. Erect a hydroelectric generating station
3. String hundreds of miles of transmission lines
The transmission lines were to be built in a way that they start near the headwaters of a system
of rivers flowing onto the plain south of the mountain region. The contract of the project was
finalized initially for $50 Million which led the contracting organizations anticipate that the
project could be completed in a reasonable time frame.
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3. Case Study – Dulhasti Power Plant Project
The Challenges
The driving factor that led to the decision of the
construction of a hydro electrical power plant was the
geographical plus points and the natural factors that acted
as an added advantage.
Mountains, rivers that were large enough to provide the
water capacity to run a hydroelectric plant for Dulhasti
dimensions were some of the naturally available support
instruments.
The following were the challenges observed during the progress of the project,
Figure 1
Positives
Challenges
Although there were two strong positives i.e. anchoring points that led to the initiation of the
project, the challenges ousted the advantageous factors of the overall proposition. The
geographical plus points were not complementary to the problems the logistics would face and
there were political issues with the neighboring country which indirectly led to additional costs.
These problems eventually led to a huge time delay in the completion and delivery of the Dulhasti
Power Plant.
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4. Case Study – Dulhasti Power Plant Project
Initial Challenge
The contract for the power generation project was
first awarded to a French Consortium. They
immediately reverted and asked for an upward
price revision. The Indian Govt. refused, having a
doubt on the French Consortium that it had known
all along that their initial bid was too low and were
hoping to simply “buy” the project prior to
renegotiating.
Given that the Indian Govt. had refused the initial price quote revision, this resulted into a second
bidding process. There was a wide competition from other European countries then in the field.
However, the second bid offer by the French was surprisingly much lower than the first one.
Although this process initially appeared to save the Indian Govt. a lot of money, it was not a good
and smooth beginning to the partnership between the Govt. and the French Consortium.
Political Issues
The site selected for the project, unfortunately, came with
some serious drawbacks. Jammu & Kashmir shares the
border with Pakistan. As history being a strong and true
witness, India and its neighboring country have had lot of
problems. It is persistent from 1947, the year India got
independence and experienced a partition with Pakistan.
Jammu & Kashmir has been the epicenter of numerous and serious clashes between separatist
forces supported by the Pakistan Govt. and the Indian Army units stationed in the region to keep
the peace.
The construction of a power plant in such a disputed area would certainly provoke some sort of
a reaction by the nationalist groups, using terrorism as their chief means of opposition.
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5. Case Study – Dulhasti Power Plant Project
Figure 2
The power plant was to be constructed at the Kishtwar district in Jammu which is just a few miles
away from the Indo-Pak border. The Kishtwar region is prone to external attacks and influences
across the border. The construction of the dam would become an obvious target to the terrorists
and it could end up endangering the nearby inhabited villages and the national roadways of India
which is one of the prime sources for material transportation for the Indian Army.
This led to the inclusion of additional charges of security for the site and the surrounding areas,
and it undoubtedly became prohibitively expensive. The initial estimation would have certainly
not made any provision for security – around the site and the neighboring areas, this uncounted
area must have gone rising till the final completion of the project.
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6. Case Study – Dulhasti Power Plant Project
The security has to be given right from the time the project work starts on the construction site
and it has to be stabilized and continued even after the completion of the power plant in order
to ensure that the massive effort put in does not go in vain.
Geographical Issue
As mentioned earlier, the construction site was situated in
the mountainous region of Jammu & Kashmir provinces, the
site was intended to capitalize on the proximity of the large
river systems capable of providing the water capacity that
was needed to run a hydroelectric plant of Dulhasti’s
dimensions.
The geographical challenge – creation of a large plant in a region that almost totally devoid of
supporting infrastructure. This also included an adequate logistics network (roadways and
railways). The ideology of building the power plant in the foothills of the Himalayas may sound
flabbergasting and look very scenic when done, but it was absolutely not cost effective,
particularly as almost all the supplies had to be brought in with air transportation metering up
the cost bar exorbitantly.
All the raw materials viz. cement, wood, stone and steel had to be hauled by helicopters for miles
over snowbound areas. Not to forget, the climate conditions. It snows for more than half a year
in Jammu and Kashmir and convincing labor (highest authority engineers to skilled laborers who
do the hardcore jobs) to work in those conditions was impossible without paying them a fat
packet of money each month. This also surpassed the initial estimation.
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7. Case Study – Dulhasti Power Plant Project
Project’s Frontier
The following graph explains the project’s timeline in general. The
power plant initiation to completion is spread over a span of 22 long
years. The big impact on the project’s progress was due to the Kargil
War (fought between India & Pakistan over seizing the territory of
Kargil which lies in the Indian occupied Kashmir) that went on for more
than 90 long days i.e. from May to August 1999.
The impact was worsened since it was the same year the project underwent its second major
revision with regards to structure, logistics and other important dynamics that were the active
catalysts in the project.
Figure 3
1985
1990
1995
2000
2005
2010
Project's Overall Span
French Cosortium 1st Bid
1st Major Revision
2nd Major Revision
Kargil War Effects
French Consortium Backs Off
New Contract Norwegian Co.
There was more to come. After the Kargil War subsided; although the after effects were bad, the
project had no time to recoil and gain a stable resumption.
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8. Case Study – Dulhasti Power Plant Project
The reason being the French Consortium which was in-charge of the whole program backed off.
They had pulled out due to some major differences with the Indian Govt. over the cost and the
work policy.
This forced the Indian Govt. to reissue the bid and this time the project was awarded to a
Norwegian Co. that led the project work with complete charge from the year 2002 till the
completion of the completion i.e. the year 2007.
The following graph shows the cost graph for the Dulhasti Power Plant. It started with an
estimation of 50 Million $ in its year of inception and shows an exponential raise to 1.5 Billion $
till completion. This jump is enormous and disastrous at the same time as it becomes a vivid study
for cost estimation failure and project delivery.
Figure 4
Dulhasti Power Plant's Cost
1600
1400
in Million $
1200
1000
800
600
400
200
0
1985
1987
1990
1995
2000
2002
2005
2007
Year
The work on the plant continued in fits and starts for over 20 years. By the turn of the century,
over $1 Billion had been spent on the Dulhasti project and the plant was still not operational.
Further, in order to offset the expense of the project, the cost of power to be generated by the
plant has risen by over 500%, making the plant an inefficient producer of electrical power for the
countryside.
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9. Case Study – Dulhasti Power Plant Project
Conclusion
The Dulhasti Hydroelectric Power Plant finally became operational on the 7 th of
April, 2007. It has been generating 1907 Million units of electricity in a 90%
dependable year.
It is one of the major accomplishments for NHPC (National Hydroelectric Power Corporation)
thereby building one of the most important HPPs in India, thus allowing for an integrated and
efficient power development.
The Dulhasti Power Plant serves eight states and the capital of India – Delhi, Jammu & Kashmir,
Himachal Pradesh, Punjab, Haryana, Uttar Pradesh, Rajasthan, Chandigarh and Uttaranchal.
Appendix – Figures & Images
Exhibit
Title
Figure 1
SmartArt Diagram – Beam Balance
Figure 2
Northern Provinces of India
Figure 3
Project’s Timeline
Figure 4
Dulhasti Power Plant Cost Graph
Image Courtesy
www.google.com/images
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10. Case Study – Dulhasti Power Plant Project
Bibliography
1. Blog, H. (2010, October 29th). Issues and Problems in Hydro Power Development in
India. Retrieved from HydroPowerStation.Com:
http://hydropowerstation.com/?tag=dulhasti-hydroelectric-project
2. Engineering, T. (2007, Apri 10). Dulhasti Dam & Hydro Electric Power Project. Retrieved
from Tractabel-Engineering: http://www.tractebel-engineeringgdfsuez.com/reference/dul-hasti-dam-and-hydroelectric-power-project/
3. Govt. of India. (2007). Project Implementation Status Report of Central Sector Projects.
Infrastructure and Project Management Division. New Delhi: Ministry of Statistics and
Programme Implementation.
4. Knowledge, M. H. (2012, November 7th). Working Challenges in Adverse Geological
Conditions. Retrieved from Blogspot.Com:
http://mmmhydropower.blogspot.com/2012/11/working-challenges-inadverse_8814.html
5. NHPC. (2008). Dulhasti Power Plant Project. Kishtwar, Jammu & Kashmir, India.
Retrieved from http://www.youtube.com/watch?v=q9A6kbDdQKk
6. Parihar, P. (2010, February 10th). Kishtwar - Ek Jannat. Retrieved from Blogspot.Com:
http://mykishtwar.blogspot.com/2010/02/dul-hasti-project.html
7. PM News Bureau. (2005, December 5th). Dulhasti Project by March 2006. Retrieved
from Project Monitor.Com:
http://www.projectsmonitor.com/detailnews.asp?newsid=10119
8. Rocky, R. (2007, April 7th). Dulhasti - A Ray of Hope for the Dark J&K. Retrieved from
Indian Express.Com: http://www.indianexpress.com/news/dulhasti-a-ray-of-hope-for-dark--jk/28049/0
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