Citing delays in starting work, Himachal Pradesh has cancelled a deal with a private company to build a 70 MW power plant in the hill state.

The decision was taken at a cabinet meeting late Monday presided over by Chief Minister Virbhadra Singh, an official spokesman said.

The Dhamwari Sunda project was to have come up in Shimla district.

The cabinet also gave its nod for the 450 MW Khab-1 project in the Sutlej basin and for signing a power purchase agreement with the National Hydroelectric Power Corp (NHPC), which has built three dams in the state.

"The cabinet has given permission for signing the power purchase agreement with NHPC, which has executed the 800 MW Parbati II, 300 MW Chamera II and the 23 MW Chamera III," the spokesman said.

At 21,000 MW, Himachal Pradesh has over a fifth of the country's power potential. But due to lack of funds, projects are underway for generating only about 6,000 MW.

--Indo-Asian News Service