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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.
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