Throttling Rattle

Omar Abdullah government innovated tariff-based bidding and gave Rattle for implementation on the lowest ever prospective tariff. More than two years later Tasavur Mushtaq reports the GVK is keen to say good-bye to the project

Once hailed as hope for energy-deficit J&K, the Rs 6000 crore Rattle Hydro Electric Power Project (RHEPP) is caught in darkness. Slated for commission in 2017, the Hyderabad based developers GVK Development Projects Private Limited has fled from Chenab Valley. It has been 14 months since the project is orphaned.

Sources in the power department told Kashmir Life that “GVK has formally applied for the cancellation of the contract.” Interestingly, the company has already spent over Rs 600 crores on the project in last few years, but still halted its operations abruptly in July 2014 and left the scene. The application is being examined at the highest level.

Senior executive in Power Development Corporation (PDC), partner of the project, says that, “the company cannot afford to leave the project because it is bound by the agreement. But if it does, we have the capacity to complete it.”

GVK has set a series of pre-conditions to resume the work including ‘waiver of Water Usage Charges and compensation for any delay that discussions under Indus Water Treaty may result in’.

Insiders told Kashmir Life that GVK has re-visited the project report and found that the halt in work has escalated the costs and the “project would turn out to be a loss for the company.”

Awarded in 2010, GVK inked deals with French equipment-maker Alstom for electro-magnetic part and with Larson and Turbo for the civil works. In 2012 state cabinet accorded approval to lease out 567.22 hectares, comprising 138.93 hectares of forest land, 281.09 hectares of state land, 55.00 hectares of private land and 92.20 hectares of river bed area falling in village Drabshalla of Kishtwar district, to GVK for a period of 35 years from the date of commercial operation.

The actual work began in 2013. An amount of Rs 262 crore was allotted for environment management, rehabilitation and resettlement people affected by the project.

But since the beginning the multi-crore project ran into controversies. On regular basis people of Drabshalla, Bunjwah, Saroor, Kahara and Thathri blocked Batote-Kishtwar highway, demanding adequate compensation to the dislocated; employment to local youth among other things.

As a resultant, GVK stopped work citing “the insecure atmosphere and repeated interference from some groups.” A GVK official was quoted saying, “For construction of any project, it requires a favorable atmosphere which is lacking under present circumstance.” What is now seen as a veiled threat to quit the official added, “The project is done on a Private Public Partnership (PPP) and any delay will be suicidal. We cannot afford the losses.”

One of the major blows to the project happened when Martin Bookly, Project Head, who is from Switzerland, resigned because of appointment of influential youth and lack of support.

Interestingly, Rattle was pegged as former chief minister Omar Abdullah’s dream project. He introduced new and foolproof system of bidding for this project. The then opposition PDP accused NC of doing it for the “personal gains”.

In 2010, PDP, led by its senior leader Nizam-ud-din Bhat accused Omar Abdullah of receiving kickbacks worth Rs 500 crore for allotting the project to GVK. The accusations took ugly turn when NC dragged Bhat and Naeem Akhtar to court filing a defamation case against them. The case is yet to reach any conclusion, however Bhat later publicly tendered an apology to Omar.

Stuck in obstacles, Rattle has distinction of being state’s first mega power project constructed on Built, Own, Operate and Transfer (BOOT) basis, it will be returned to Power Development Corporation (PDC)  after 35 years on the payment of Rs 380 crore.

Rattle was initially expected to generate 690-MWs of power but a subsequent survey by the GVK up graded it to 850 MWs.

Rattle is India’s first hydroelectric project given for implementation through tariff based international competitive bidding in which PDC will get 15 percent generation as royalty and will enjoy first right to purchase for 55 percent generation at the rate of Rs 1.44, a unit.

This is less than the unit price paid by the state government to Northern grid. Besides this, Rattle also has a distinction of being the first private sector investment in the power sector of J&K.

Due to non-resuming of the work and overstepping the commencement date, J&K will lose nearly Rs 1500 crore annually on power tariff and also a viable option to reduce power deficit crisis.

Deputy Chief Minister Dr Nirmal Singh who also holds portfolio of power ministry while responding said that “the agency has been given notice to resume work.”

But there seems to be no end in the deadlock as of now.

If the crisis persists, this would mean that the first ever initiative of awarding power project on tariff based international competitive bidding will meet the unexpected fate and project would face permanent closure at infancy stage. Being first in ‘many’ ways, Rattle will throttle only if government wakes up and takes it as priority.

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