The Comptroller and Auditor General of India (CAG) in 2014 conducted a performance audit of the project to analyse the reason in delays and overall implications on the viability of the project.

The report of the CAG states, "The initial cost of the project in 2007 was estimated at 558.53 crore (INR) but given the delays, the cost has escalated upto 1,165.10 crore (INR). This has also meant an increase in per megawatt cost of electricity from 5.03 crore to 10.50 crore.”

Sawra-Kuddu plant falls under the "Himachal Pradesh Clean Energy Development Investment Program", funded by the Asian Development Bank. The ADB scheme intends to promote hydropower in the state to reach the 50,000 MW installed capacity goal set by India's Hydro Policy 2006. It comprises of 4 ADB funded plants in total, in different districts of the state. The programme is, according to ADB, expected to reduce GHG emissions thereby qualifying sub-projects under the program for carbon credits. As per the bank, the Future Carbon Fund managed by ADB itself, will enter into a purchase agreement with HPPCL to buy post-2012 carbon credits. Besides funding hydropower plants, ADB is also engaging in the Himachal Pradesh Clean Energy Transmission Investment Program, for developing new transmission lines and make private investment in the sector more attractive for Independent Power Producers.

As of July 2015, the project is under construction by the Himachal Pradesh Power Corporation Limited (HPPCL). The natural river bed fall of approximately 13 kms of the Pabbar River will be utilized for the project. The dam site is located in Hatkoti Village in Rohru tehsil, while an underground power house at Snale village, close to the border with Uttarakhand. The total catchment of Pabbar river falling in Himachal Pradesh is about 1034 Sq. Km. Five (5) HEPs are proposed in a cascade along the entire length of Pabbar falling in HP. The uppermost being Tangnu-Romai, followed by Dhamwari-Sunda, Majhgaon-Chirgaon, Paudital-Lassa and Sawra-Kuddu being the lowermost. They will have only one transmission line (common to all the projects) to evacuate power of all the hydel projects from the valley to hopefully reduce financial cost and environmental impact.

As part of a collaborative field visit, we visited the construction site of Sawra Khudu project in April 2015 and met with an HPPCL officer at the site office (who asked to remain anonymous). He shared that ADB is funding the Barrage, Power house, and Turbines of the project whereas the state government is financing the construction of Head Race Tunnel. As per the official, since tunnel construction happens to be highly intensive in terms of impacts and raises accountability issues (landslides, impacts of aquifers, slope destabilisation)- the reason the State Government chose to fund this particular component of the project. He also admitted that costs will surely rise up to 1,165 crores. According to him, the reason why costs escalated to this extent was due to the cost underestimation by the construction company. "The tunnel construction contracting had gone hay wire. It was joint venture between Kirloskar and Coastal projects and HPPCL. The construction company had quoted 25 percent less than the estimated cost, and moreover could not complete the work on time despite being granted 40 %more time. In 2007, State government's estimated cost was 240 crore and the contract company estimated 110 crore. The company got the payment of 62 crores, and the 55 percent balance was re-tendered at an additional cost of 180 crore. This has also raised the generation cost from 3 rupees per unit to 9. But over years this cost will be recovered", stated the HPPCL officer.

Interestingly enough, he also mentioned that the less viable projects are usually executed by the State government whereas the ones which have higher chances to make profits will be allotted to private producers.

So far, up to 45 ha of private land has been acquired while 53 ha of forest land has been diverted. There are 12 Panchayats that will be directly or indirectly affected in varying degrees due to the project or project related activities. There is not a very strong mobilization in the area by people opposing the project.

However, those individuals and groups who have opposed the project have raised concerns about low compensation rates (a decision is now pending at the High Court on the amount after an appeal filed by HPPCL), the impacts on local horticulture (especially on the profitable apple orchards, backbone of local economy), and the instability of the terrain. Due to the blasting for tunneling, in fact, houses and roads on mountain are experiencing cracks on the walls and being repaired on people's own expenses.

Crack in houses have been particularly severe in Thana village ( one of the villages above the tunnel). Local families feel insecure and question the way and criteria compensation measures are set; they said blasting normally occurs at night.

A local ex pradhan (ex village elected representative) showed us the cracks in his own house (see pictures) and stated about 40 water sources have dried up in the area between the dam and the power house, above the tunnel. The company's reply to this concern was that natural water springs will slowly recharge and reappear once the tunnel construction is completed. He brushed off the matter stating the absence of any scientific literature establishing or proving linkages between drill and blasting method used and its impacts of underground water aquifers. However, in the state of Himachal Pradesh itself, in regions like Kinnaur, community produced knowledge has substantiated this fact repeatedly.

A local young driver took us through the construction site where we could see workers with no safety measures still at work in the dark after 8pm and their colony nearby in very precarious conditions. Most of them come from impoverished states like Bihar and Jharkhand and countries like Nepal. Given the controversies and dilly dallying around the project funding, the local youth were also significantly impacted in form of erratic employment. The project construction was put at halt for sometime, and many young people from the area initially hired by the construction company were fired. The sudden inflow of cash also resulted in high rates of alcoholism among the youth.

The Sawra-Kuddu project has applied for CDM funds but as energy is not being generated yet, the application is still pending.

The gross annual energy generation from the project is estimated at 332,150 MWh. After accounting auxiliary consumption at 1% and transmission losses at 0.53%, the energy available for export to the grid is estimated at 327,068 MWh. The energy available for sale is estimated at 284,549 MWh 1 considering 1% supply of free power for the Local Area Development and 12% supply of free power to the state utility. From HPPCL data, "The project comprises of a piano key weir, an intake structure to draw 78 cumecs discharge through three openings, surface gutter type de-silting arrangement divided into three portions, each 80 m long 19.5 m wide and 10.5 m deep for exclusion of silt particles down to 0.2 mm size, 11.145 km long, 5 m diameter D-shaped Head Race Tunnel, 14 m diameter 82 m high underground restricted orifice type surge shaft, 4 m diameter steel lined pressured shaft, trifurcating in 2.30 m diameter branch shafts, to feed three 37 MW capacity each vertical axis Francis turbines, housed in an 90 m x 14 m x 39 m size underground power house cavity located on the left bank of the Pabbar river near Snail village."

It is proposed to evacuate the power generated inter alia at Sawra Kuddu project by laying a 100 Kms long, 220 KV line with ZEBA conductor up to 220/132 sub station Giri. The transmission line would carry the power generated by other projects also in the valley. The project was accorded the Techno Economic Clearance in November 2004.