The water resources department's decision to share cost of the 130MW Dagmara hydel power project over the Kosi river has triggered hopes about Central Electricity Authority's (CEA's) nod to the ambitious scheme.

The fate of the state government's biggest hydel project was uncertain following CEA's objection owing to higher cost. The CEA is a nodal agency under the power ministry that advises the government on matters relating to the National Electricity Policy and formulates short-term and perspective plans for development of electric systems.

After the water resources department agreed to share Rs 710.35 crore for flood protection and embankment strengthening work, the project cost reduced by 27 per cent, making the scheme viable.

"CEA had objection on the higher cost involved in the project which made it unviable. Now, the major bottleneck (of higher cost) has been removed, so I don't think the authority would have any problem giving nod to the detailed project report (DPR) which has been pending before it (CEA) since April 2012. The authority is expected to give its nod to the project very soon, probably in less than a month's time," a Bihar State Hydroelectric Power Corporation (BHPC) official said.

Sources added that the estimated cost was Rs 2,553 crore, which would have led to higher tariff rate of Rs 16 per unit, making the project unviable. The project was required to be reduced by 20 per cent to achieve an estimated cost of Rs 2,000 crore and hence feasible but now the cost has been reduced by 27 per cent.

A meeting was organised in the chamber of power minister Bijendra Prasad Yadav on May 16, 2015, attended by energy department secretary Pratyaya Amrit, BHPC managing director R. Lakshmanan and the chief minister's energy adviser, P.K. Rai.

Lakshmanan said on Thursday: "We have submitted a fresh proposal to the CEA and we expect there would be any problem in clearance for the project."

During the meeting, it was decided that the water resources department would spend Rs 710.35 crore. Of this, Rs 56.85 crore would be spent on strengthening embankments and the remaining on flood management. The amount (Rs 710.35 crore) is 27 per cent of the project.

Sources said the state government approached the Central Water and Power Research Station (CWPRS), Pune, to get flood control benefit done but CWPRS did not quantify it in value. BHPC estimated the flood control benefit at Rs 710.35 crore and discussed it with the water resources department, which agreed to share the cost.

The first DPR was prepared by a government consultancy firm Water and Power Consultancy Service (WAPCOS) under the guidance of an Asian Development Bank (ADB) team at a cost of Rs 5 crore with the project cost estimated at Rs 1,000 crore.

The barrage would be constructed between Bhaptiahi and Dudhaula villages in Supaul across 100 acres. The project, which is likely to take four to five years for commissioning, would irrigate five lakh hectares in addition to eight lakh hectares being irrigated from the existing Bhimnagar barrage.

On funding for the project, the official said funding would not be a problem, as many national and international agencies like Japanese Investment Corporation Agency, ADB and others, had shown interest.