Bone of contention

Arunachal turns to private Players for hydel power

By Nitin Sethi
Published: Saturday 04 July 2015

the national Hydroelectric Power Corporation (nhpc) -- a Government of India enterprise -- has petitioned the Union ministry of power against Arunachal Pradesh signing a memorandum of understanding with private companies to construct and run hydroelectric power projects.

The dog fight ensued after the Arunachal Pradesh government handed over five hydel power projects to three private companies: Reliance Energy Ltd (rel), Jaypee Industries and d s Constructions. nhpc's grouse is that the state government took an abrupt decision to hand over projects to private companies despite the fact that nhpc had already submitted detailed project report for one and was in an advanced stage of preparing for the other three.

The state is however unperturbed by nhpc's complaints. "In an earlier cabinet meeting the government had decided the state would only allow run-of-the-river projects. But private players promised us more free power than nhpc ," says Omak Apang, mla and advisor to the state government.

The controversy has roots in the Union government's norms which stipulate that public sector units generating power must give 12 per cent of the total power generated to the state government free of cost, which the state can later sell for revenue generation. nhpc has protested calling it an "unprofitable idea". "Only hydropower projects are loaded with such conditions not thermal and others, as water is a state subject," says a senior official in nhpc's corporate office.

But now the private players have promised to provide free power, even way above the stipulated 12 per cent. j p Associates Ltd will execute the 1,600- mw Lower Siang hydel power project (hep) and 500- mw Hirong hep; Reliance the 700- mw Tata II hep and 1,000- mw Siyom hep; and d s Constructions the 1,000- mw Naying hep.

The projects will be on a 45-year lease on a build-own-operate-transfer basis. The free power to the state, as committed under memorandums of understanding, is as high as 15-19 per cent over the later years of the projects. Meanwhile, state chief minister Gegong Apang is reportedly claiming that the companieswill pay Rs 20,000 crore -- half as the earnest money and the rest as the value of free power to be adjusted later.

nhpc officials still contend the Central Electricity Authority in its roadmap for hydroelectricity development had handed over these projects to nhpc and not the private sector. But senior state officials, speaking off the record, stated that the argument was more about state's role in hydropower development model and how the centre and public sectors units like nhpc had run roughshod over state governments and not negotiated over what was essentially a state subject: water.

J P Chalasani, director, business development with rel clarified that the company was not party to any dispute as the argument lay between nhpc , the state and the central government.

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