Transfer of Power Projects:Ten Unanswered Questions

  • Iftikhar Drabu
  • Publish Date: Apr 1 2016 3:28PM
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  • Updated Date: Apr 12 2016 12:43PM
Transfer of Power Projects:Ten Unanswered Questions

Is the much politicized and sought after return of power projects beneficial to the state in the long run?

 

In recent times the issue of return of hydro power projects from NHPC has regularly been discussed in various political and non political forums. Scores of articles have been appearing in nearly all the local newspapers and there have been posts on social media attributing all our economic woes and problems to these projects not being owned by the state government. The issue has also been deliberated at length even on our traditional social forum, i.e. the naved wans and dukan penghes. I think after autonomy or self-rule, depending on what mainstream political dispensation you belong to, the return of power projects is the most widely debated subject in state’s political circles these days. Return of power projects figures at the top of the list of conditions set by PDP for formation of the new government in the State.

I’m not sure where it started but since the publication of the Rangarajan Report of 2006 the issue has caught the attention of one and all. A lot has since been written on the subject and the conclusion has been unanimous that there will be complete transformation of the state economy and all the woes ailing our economy will disappear as soon as these projects are taken over from NHPC.

For some the issue provides good topic to write about (though not necessarily understanding the subject!), for others it presents an opportunity to level a grudge against NHPC for not giving supply contracts, while for others for not giving jobs to their party workers. But most of us genuinely believe that the return of these projects will provide the Midas touch to the local economy.

The issue needs detailed deliberations to fully understand the implications of such a move. It might seem good in short term but whether it is beneficial to all the regions of the state in the medium or long term needs to be ascertained. The risks associated with taking over such large hydro projects which are two decades old and thus requiring heavy maintenance, the issue of jeopardizing State’s firm allocation in other central generating stations, particularly from thermal (coal, gas, nuclear) needs to be fully understood. Relying only on hydro and not maintaining a proper mix of hydro and thermal in the power portfolio is very important as is the risk of investing only in hydro in the long term given the issues with global warming and climate change.

Before one gets into the discussions (which I plan to take up in a few subsequent pieces ) on whether the transfer of these projects is beneficial to the state in the long term, one needs to seek answers to the following ten basic questions regarding the sought transfer of these power projects:

     Though discussions have generally centered around Salal HEP, DulHasti HEP and Uri HEP, how many NHPC projects do we want back? Currently NHPC has 7 operational projects with installed capacity of 2009 MW. Under construction, the 330MW Kishanganga HEP is likely to be commissioned by end of the year.

     Do we want just the concurrence of the Central Government to transfer these projects to State Government or are we also looking for funding (grant or loan) from Central Government to pay to NHPC the depreciated value of these projects.

     Since NHPC is a publicly listed company, is even its Board empowered to take such a decision which is politically motivated and which can jeopardize the interests of its shareholders? 

     Do we just want to have ownership of the projects transferred to JKSPDC (Jammu and Kashmir State Power Development Corporation) and leave all existing arrangements in place as they are now so that we only get the profits from the sale of energy from these projects without changing the existing systems? 

     If not, post the transfer of these projects, how do we intend to operate and maintain them? Some of these projects have been in operation for more than two decades and need a lot of skilled maintenance. Salal HEP should be due for refurbishment. Are we going to ask NHPC to maintain them as we initially did for Baglihar HEP?

     JKSPDC has not been able to constitute its Board since June 2014. It took JKSPDC more than 5 years to restore a breach in Upper Sindh Project resulting in loss of energy to the tune of 10 times the cost of repairing the breach. For more than two years JKSPDC could not take decision on the Rs 1.8 crore tender for Quantification of Losses to J&K on account of Indus Water Treaty. In light of these just a few instances, are we confident that it has the necessary structure in place to be able to run these projects?

     Post the transfer of ownership, do we intend to abrogate all the power sale/purchase agreements, with utilities of other state governments, which are in place for the sale of energy generated by these projects?

     Post the transfer, do we intend to forego our entitlement to allocation of energy from various power (hydro, thermal, gas, nuclear,) projects developed by central government in various states? Currently they contribute a large proportion of our energy needs

     If we forego the above entitlements to allocation of energy from power plants developed, how do we plan to meet our energy demands particularly in winter months when the generation from these hydro schemes could drop to one-sixth of the installed capacity?

     What happened to the revenue collected as water usage cess on hydro projects which was supposed to be invested in developing hydro power projects?  Are we going to use that to buy these projects at their depreciated value?

I do hope the politicians, civil society members, article writers, who have been vociferously advocating the return of the power projects, have answers to these questions. It is no use fighting for the return of these projects and subsequently realizing that with their return we created more problems for ourselves and then regret it for the rest of our lives.

Lastly, the energy tariff would continue to be determined on the cost plus model, though now by the State Electricity Regulatory Commission (SERC) and not by the Central Electricity Regulatory Commission (CERC) as is the case for NHPC projects. The tariff should remain nearly the same as of now. The operational costs are likely to be higher; the return on investment would continue to be same as considered by NHPC with the result that the tariff of power generated by these projects might be marginally higher than what it currently is. So how would the change in the economic landscape of the state occur with the return of these projects? This needs to be explained to the citizens of the State before any further action is taken on the issue.

 

(Iftikhar Drabu, a civil engineer with a masters degree in construction management, has been working on hydro power projects for over three decades, both in India and outside. He has been involved in DulHasti, Uri I, Kishangana, Sawalkote, Ratle, New Ganderbal and several other smaller hydro projects in J&K. Currently, he is working with Ramboll as Senior Director and Head of its Global Engineering Centre in Gurgaon)