New Delhi: The Arunachal Pradesh government awarded private companies contracts to build four hydro power projects even after state-owned NHPC Ltd had done extensive preliminary work on the projects in the form of Detailed Project Reports (DPRs), said former and serving executives of NHPC on condition of anonymity.
This may put the central government, already under fire for irregularities in the allotment of captive coal blocks, under pressure to fend off accusations that the companies benefited unduly from the state-run company’s efforts.
The Arunachal Pradesh government is run by the Congress party, which also heads the ruling federal United Progressive Alliance administration that’s fighting off allegations of corruption on coal allocations.
The state government awarded the Siyom (Siang Middle, 1,000MW), Siang Lower (2,700MW), Subansiri Middle (1,600MW) and Subansiri Upper (2,000MW) projects to Reliance Energy Ltd, Jaiprakash Associates Ltd, Jindal Power Ltd (JPL) and KSK Energy Ventures Ltd, respectively. Jindal Power is owned by Congress party lawmaker Naveen Jindal.
Anil Razdan, a former power secretary, said the central government could be embarrassed by the award but the state is responsible for decisions on hydro power.
“Water and power are state subjects,” he said. “It’s the state which decided the award of such projects. It’s a very difficult situation and the Union government’s interventions are best described as clumsy.”
In light of the awards, the national auditor said the Union power ministry needs to instruct the state government that the allocation of such projects above 100 megawatts (MW) needs to be “fair, transparent and competitive”.
A DPR forms the basis for the execution of capital-intensive projects, which involve relocation and resettlement of project-affected persons and the ability to withstand geological surprises. DPRs involve a substantive investment in time and money, for which NHPC is said to have been compensated. This however doesn’t make up for the time and effort expended, the executives said.
“This is like the coal scam. No one spoke to us. They should not have done this. All the projects were given away even as we had invested time and money in the preparation of their DPRs,” said a senior NHPC executive requesting anonymity. “While the DPRs were already prepared for Subansiri Middle and Upper projects, they were almost ready for Siang Middle and Lower projects.”
A former NHPC executive, who also didn’t want to be identified, said, “This is a clear example of how hydro power projects were bungled and awarded. The DPR forms the basis of everything from project funding to construction. It was a smart ploy as they took away only those NHPC projects whose DPR was prepared, saving them the time and effort for such preparations. There has been manipulation on part of both state and central governments.”
To be sure, no memorandum of understanding (MoU) was signed between NHPC and the Arunachal Pradesh government for the execution of the afore-mentioned projects.
“The state had issued notification for us to start work on the DPR. The Arunachal Pradesh government gave them away and the central government couldn’t do anything. Their award to private sector companies wasn’t transparent,” said the serving NHPC executive quoted above. “While we were compensated for the preparation of DPRs, we never wanted the projects to go away. Our efforts went in vain.”
The office of G. Sai Prasad, joint secretary in charge of hydro power in the ministry of power and who also holds the additional charge of chairman and managing director of NHPC, directed queries to the state-owned company. An NHPC spokesperson didn’t respond to queries emailed on 30 September.
Jindal Steel and Power Ltd (JSPL) said the state-owned company’s task was limited to preparing the report.
“NHPC was only given the task of preparation of DPR for Middle Subansiri, and not allocated the project for implementation of the projects. No MoU was signed between NHPC and the government of Arunachal Pradesh for implementation of these projects,” a Jindal Power spokesperson said in an emailed response. “NHPC did some work for preparation of DPR; however they couldn’t complete the same, nor could they submit the DPR to Central Electricity Authority for approval. We have paid Rs.105 crore to NHPC for the work they have done for preparing the DPR.”
Questions emailed to spokespersons of Reliance Energy, Jaiprakash Associates and KSK Energy Ventures on 30 September remained unanswered.
Arunachal Pradesh chief minister Nabam Tuki defended the allocation process. “Hydro power projects were awarded to private companies as per the national hydro power policy and the state hydro power policy. Even NHPC and Neepco (North Eastern Electric Power Corp. Ltd) have been awarded projects,” he said in a telephone interview. “Some projects were allotted through the international competitive bidding route and some through public-private partnership (PPP), i.e. the joint venture (JV) route. For the JVs no bidding is required.”
Executing a hydro power project is a time-consuming and tedious process. It includes a thorough survey and investigation, DPR preparation, relocation and resettlement of the affected population and infrastructure development. On an average, it takes around five years to execute a hydro project after it is cleared for construction.
The Comptroller and Auditor General of India (CAG) highlighted the state’s decision in its report, Performance Audit on Capacity Expansion in Hydro Power Sector by CPSEs (central public sector enterprises), tabled in Parliament recently.
“Despite specific directions (August 1999) from prime minister’s office (PMO), MoP (ministry of power) did not form special purpose vehicle (SPV) for survey, investigation and implementation of the Siang and Subansiri multipurpose projects (six) in the Brahmaputra basin in Arunachal Pradesh,” the report said. “Instead GoI (government of India) allocated (May 2000) six projects (20,700MW) to NHPC of which only one project i.e. Subansiri Lower (2,000MW) is being executed by NHPC.”
It added: “Later government of Arunachal Pradesh allotted (February 2006, August 2009 and March 2010) four of these projects to the private developers/ joint ventures…The decision to move from SPV to NHPC and then to private developers only added to the delay in the execution of projects.”
There have been concerns about faltering hydro power generation in the country, accounting as it does for 39,291.40MW, or 19% of India’s 205,340.26MW power-generating capacity.
Arunachal Pradesh boasts the highest potential for hydro power generation in the country. The potential of the north-eastern states and Bhutan in this regard is about 58,000MW. Of this, Arunachal Pradesh accounts for 50,328MW, or about 87%. The state government has allotted 88 hydro power projects totalling 33,154.5MW to private companies.
The CAG report went on to recommend: “MoP (ministry of power), through its oversight role, should therefore impress upon the state governments to allocate hydro power projects above 100MW to the developers in a fair, transparent and competitive manner.”