Companies from Russia, Scandinavia and France are looking to form joint ventures (JVs) with Indian firms to set up hydroelectric power projects in India, a business in which the country is just beginning to tap some of its considerable potential.
“There are three companies who are in active talks from these geographies for setting up JVs to enter the Indian hydrolectric power generation sector,” said a senior official in the power ministry, who did not wish to be identified. India has “exploited only 25% of its hydropower potential,” the official added, saying such ventures could help the country meet targets it has set.
The government plans to set up 16,553MW of hydropower capacity in the five years to 2012, and another 30,000MW in the five years to 2017.
The official did not disclose the names of the companies. Big hydropower companies from these regions include Eletricity De France and Norwegian state-owned electricity company Statcraft.
The government is hoping the involvement of foreign firms will boost growth in the sector. These firms have the technical and construction expertise for setting up projects which are more complex to build, and need specialized technology and design inputs.
The Tehri hydro power project. The government plans to set up 16,553MW of hydropower capacity in the five years to 2012, and another 30,000MW in the five years to 2017. (Rajeev Dabral / Mint )
Several hydro projects in the country have been delayed and India has met a little less than half the target of 14,393MW set for hydropower generation in the five years to 2007. In April, a study by the parliamentary standing committee on energy showed the increase in project costs due to delays varied from 400% to 2,500%.
“A large part of the delays have been on account of rate disputes with private contractors and their inability to take a large number of projects due to a dearth of good civil contractors in the country. These overseas firms have experience in constructing hydro projects,” the official said.
Companies that work on hydroelectric projects in India include Patel Engineering Ltd, Jaiprakash Associates Ltd, Hindustan Construction Co. Ltd and Gammon India Ltd.
“Much will depend on how fast the states allocate the projects to the developers in a transparent manner. Since there is a scarcity of construction companies in the country, JVs such as these will be quite helpful,” said R.V. Shahi, former power secretary.
But not everyone is convinced the entry of foreign firms will provide a fillip to hydropower generation. A senior official at the country’s largest hydropower company, National Hydroelectric Power Corp. Ltd (NHPC), who did not wish to be identified, said these firms had been trying to enter India “for a long time” with little success. “Though they have the expertise in setting up complex hydro projects, they are not willing to take and share risks,” he said.
NHPC’s plans to become a 10,000MW entity by 2012 have already been delayed, as reported by Mint on 18 January.
Still, the possible entry of these companies at a time when the country is coming out with a new hydro policy could turn things around.
With the share of hydropower generated in the country falling from 40% to 25% in the past 20 years, the government is worried, as hydropower makes up only 32,000MW of 135,000MW power generating capacity.