New Delhi: The Arunachal Pradesh, Uttarakhand and Himachal Pradesh governments are not only accepting advance payments from developers of hydroelectric power projects before they receive mandatory environmental clearances, but are also diverting a part of that money, which should be used to rehabilitate people displaced by the hydro projects, elsewhere.
The practice has come in for criticism from the Union power ministry because state-owned firms developing hydro projects cannot usually make such advance payments and, because, when the payments are made, they are to be used to fund rehabilitation efforts.
Cash Before Delivery (Graphic)
Hydro projects take a significant toll on the local environment and populace, and require some amount of displacement of people.
“The state governments do not make use of the money for the development of the project-affected people, but use it for other purposes. This practice should stop,” said a senior Union power ministry official who did not wish to be identified.
Arguing similarly, Jairam Ramesh, minister of state for power and commerce, said: “The concept of initial advance puts the public sector companies at a disadvantage. I am also concerned at the rapid pace at which the projects are being awarded in Arunachal.”
The north-eastern state of Arunachal Pradesh is in the centre of the controversy because it boasts the most potential for hydropower generation in the country.
The total hydropower generation potential of the north-eastern states and Bhutan is about 58,000MW. Of this, Arunachal Pradesh alone accounts for 50,328MW, and has attracted several private sector hydro project developers such as Reliance Power Ltd, Jaiprakash Associates Ltd and DS Constructions Ltd.
The refusal by NTPC Ltd, a public sector firm and India’s largest power generation company, to pay an advance has led to the Arunachal Pradesh government threatening to cancel a contract to develop projects at an estimated cost of Rs22,500 crore. The state government wants NTPC to pay Rs5 lakh per megawatt as the upfront payment for the two projects at Etalin (4,000MW) and Attunli (500MW), as reported by Mint on 19 February 2008.
In the case of the Dibang hydropower project in Arunachal Pradesh awarded to NHPC Ltd, which is yet to receive environment and forest clearances, the state government has accepted Rs225 crore as advance payment and has used it to revive the ailing Arunachal Pradesh State Cooperative Apex Bank. However, T. Norbu, Arunacha Pradesh’s power secretary, defended the state’s move and said the decision was taken after “discussing the issue with NHPC, the finance ministry and the Planning Commission”.