In 2006, the project was allotted to Brakel Corporation, which was challenged in court by other companies.
The state cabinet, which met on Monday, gave its nod for the extension in the commercial operation date of small hydro projects upto 5 Mw.
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It has cancelled the Baggi Nallah and Ghayagi hydro projects in Mandi and Kullu districts respectively.
The construction of the much delayed Jakhu ropeway in the state capital may finally start with the cabinet giving its approval to this project.
Norms for the construction of the building which includes six habitable floors have been relaxed by amending the Shimla municipal Act.
Now the height of the building could be 13 floors. This is bound to raise eyebrows in many quarters, making it one of the tallest buildings in Shimla.
Approval was also given for the construction of a multi-level parking facility at Tutikandi. The 11-storey building will consist of parking facility on eight floors. Two floors will be used for offices and one for restaurant.