Engaging NHPC

As certain information about NHPC’s operation in J&K were revealed through an RTI, Kashmir is back to its energy debate, singling out India’s hydropower giant for exploitation. Masood Hussain offers new information to help the narrative improve

“NHPC reply to RTI application reveals the truth of grave injustice done to J&K only partially,” civil society group KCSDS said in a statement. “It has projected a figure of only Rs 19,431 crore as its earning from the sale of power generated by its projects in J&K, which is clearly half the truth.”

This argument does trigger a lot of questions to get near the whole truth, the complete vicious circle of energy generation, transmission and consumption in J&K. To make it simple, let us frame questions and hunt answers. So the questions are:

What is the whole truth?

The fact is response to RTI is offering just part of the story. The whole story is J&K is NHPC’s power house literally. See the table about year-wise and project wise generations of the NHPC in J&K. The trend suggests that as early as 2003-04 when NHPC sold 11045 million units (mu) of energy, 6351 mu were generated by its operations in J&K which means 57% of its entire generation was from J&K. It reduced marginally to 50.15% in 2004-05 and later, when NHPC’s various non-J&K projects started commercial operations, the percentage fell. It is surging again. In 2013-14, NHPC had 55.79% of its total generation coming from J&K. In fiscal 2014-15, it was 55.77% and for last fiscal it is expected to be slightly more than 50%.

The other part of the same question is that 12% of this generation comes as royalty to state. Besides, one percent goes to the local area development. This is completely free energy.

Is it too much?

May be it is. But the fact is that NHPC has been investing in J&K for a very long time. Right now, the NHPC has seven power stations with cumulative installed capacity of 2009 MWs currently operational. If thumb rule permits Rs 8 crore per MW then NHPC has invested more than Rs 16000 crore. But it is much less because the investment was staggered over four decades. It still has three projects in hand in J&K of which 330-MW Kishanganga will get into generation in 2017.

Unlike NHPC, J&K state’s own Power Development Department has 21 small projects with a cumulative capacity of 300 plus MWs plus the 900-MW Baglihar.

Why NHPC emerged as the main harvesting agency for J&K waters is a question that needs answers from the leaders of the state, rather than NHPC. Successive regimes have encouraged NHPC – the last agreement was on July 20, 2000 – when seven projects Uri-II, Sewa-II, Nimo-Bazgo, Chutak, Bursar, Pakal Dul and Kishanganga were handed over to NHPC. Of these four are already in operation and fifth will be ready next year. Besides, leaders in J&K played spoilsport in implementation of various projects. Had Ghulam Nabi Azad government signed the cleanest of all deals for 1800-MW Sawlakote, J&KSPDC might have been playing generation two-third of what NHPC is generating right now. So the issue is to look inwards.

So what is the possibility of giving new projects to NHPC?

It is highly bleak. No government can afford it now. But there is a possibility of using the already existing Joint Venture Chenab Valley Power Projects Ltd having a shareholding of 49:49:02 between NHPC, SPDC and PTC, of being using to implement some more projects in the Chanab Valley, the main power house of the state. The JV was used by the J&K government to take back at least one of the seven projects, 1000-MW Pakal Dul, from NHPC while entrusting it with implementation of three projects including 600-MW Kiru and 520-MW Kawar. Tragically, however, it has failed in implementing even the first one. Though it has spent Rs 170 crore so far, it wrecked its one deal that it had barely signed for implementing one of the three projects. So the future in energy sector will now on be looked through SPDC prism.

Will NHPC ever return any power project?

The relationship between NHPC and J&K government had a tricky start. Salal was supposed to be JV but it was devoured by Delhi to create NHPC. The tragic contribution was hunted by a cabinet committee that said all the files regarding the project have been stolen. That is a questionable base of a relationship. The rest is clearly clean. All projects were implemented after proper agreement and there is one agreement in which there is a buy-back clause.

However, politically it has the potential. Last time when Mufti Sayeed wrote a formal letter to then Prime Minister Dr Manmohan Singh, Delhi tasked economist C Rangarajan for a report. He came with two options – one transferring Salal and second support SPDC by infusing cash for Baglihar. Delhi granted part of funds for Baglihar.

Off late, when BJP and PDP started talking on government formation, they agreed that Delhi will give a special grant that J&K can use to buy-back an asset from NHPC. It did not happen even after PDP pushed a lot. The only reason that was given was that Centre can not fund a process that will end up helping buyer purchase an asset already owned by the Centre.

But doors have not been closed on it. Last winter the two parties have created a complete way-out for transferring a project which could be implemented if the two parties want it.

If NHPC returns a project, will it help?

No. J&K’s energy sector is in shambles because of rundown transmission and distribution set up. Given the fact that J&K has the highest T&D losses, more than half of the energy the state purchased is lost. Last fiscal J&K government purchased energy for more than Rs 7000 crore, almost Rs 2000 crore jump from 2014-15.

Without improving the T&D system, if NHPC’s entire energy comes free to J&K, there will be no change.

 

What should be J&K’s priority?

Right now, SPDC must be strengthened. For a long time, J&K government is using 12% royalty from NHPC as subsidy which is loss of a fortune. Off late, it is not even paying the SPDC for the supplies that come from Baglihar. That means it is on the path of crushing its own strengths.

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