Centre, state battle over electricity

By Nitin Sethi
Published: Sunday 15 October 2006

-- A full-page advertisement on September 20 announced a ceasefire of sorts between Arunachal Pradesh and the Union government. The state government will sign memoranda of understanding (mou) with big power corporations to build hydroelectric dams in the state. The state and power giants such as the National Hydroelectric Power Corporation have been slugging over the benefits the state is likely to get out of mega-projects like the 2,000-mw Lower Subansiri project. The Union government-backed power giants are also engaged in similar battles with other resource-rich Himalayan states such as Himachal Pradesh and Uttaranchal.

The dispute impinges on India's federal structure. Electricity is generated for the entire nation at the cost of a resource-rich state's development.The question is should these states get more than their current allotment of 12 per cent free power from hydroelectricity projects.

Himachal Pradesh has consistently asked for an equal share of electricity from the 2,051-mw Parbati Hydroelectric Project and the 800-mw Koldam project. The former is being executed by National Hydro Power Corporation, and the latter by the National Thermal Power Corporation.

The state chief minister claims that both projects were allotted by the previous state government without conditions of equity participation. This is unlike the 1,500-mw Nathpa Jhakri project where the state has fought and got 25 per cent equity participation.

The power giants claim that any more sharing -- profits or electricity --will increase the unit cost of power way beyond the viable. The states dispute this argument and say they deserve more when their assets are used for an entire country's industrial needs. Earlier in the year, the Arunachal government had signed five mous with private firms which offered them a slightly better deal than the central government undertakings.

The states are asking for equity participation, guaranteed jobs for the state's citizens and a higher percentage of free power that they can sell to earn crucial money. The power giants want unfettered rights to exploit the hydro-power potential, some have even written to the centre to remove the minimum 12 per cent free power rider.

The argument might seem like different power blocks squabbling over big bucks but the wrangle has deep implications for the federal character of Indian democracy.


Truth is more Slppery
[May 15, 2005]

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