The development of the 800MW Kol dam hydro project in India has finally begun. The foundation stone was laid on 5 June by the prime minister, Atal Behari Vajpayee.

The project, located in the Mandi district of Himachal Pradesh, was supposed to be implemented by the state-owned Himachal Pradesh State Electricity Board (HPSEB). HPSEB had obtained federal approval for the project from the Central Electricity Authority and the Ministry of Environment & Forests. However due to a lack of resources, it could not take up the project for the last three years, which is now estimated to cost Rs39B (US$876M).

The state government then negotiated to develop the project and operate it, with the National Thermal Power Corporation (NTPC), which had been on the look-out for potential hydro projects in order to diversify its activities.

Under the contract signed in February 2000, NTPC will give 12% of the power generated by the project to the state for free. Another 15% of that power will be sold at a concessional rate to HPSEB for local distribution.

NTPC has devised a relief and rehabilitation package for those affected by the project. It will pay Rs60,000 (about US$1350) per family, plus 185m2 of land or Rs25,000. The ousted families will also get a self-employment loan and free education for children up to secondary school age.