New Delhi: India’s power ministry is leaving no stones unturned in pushing the Arunachal Pradesh government to revoke its decision to cancel contracts awarded to state-run power utility NTPC Ltd to build two hydropower projects in the state at an estimated cost of Rs22,500 crore.
The ministry plans to request the department of development of north-eastern region, or DoNER, to help convince the state government to let NTPC go ahead with these projects. DoNER was set up in 2001, under the ministry of development of the north-eastern region, to act as the Central nodal agency to deal with development of the region.
“We hope (that) by getting DoNER on board we would be able to convince the state government (to go ahead with the projects),” said a senior power ministry official, who declined being identified.
However, Mani Shankar Aiyar, minister for panchayati raj and development of the North-East region, said he was “unaware of any such request and, therefore, would not be able to comment on the issue.”
V.S. Rao, secretary in the ministry, also said she doesn’t know about any such request by the power ministry.
Arunachal Pradesh had cancelled NTPC’s contract to build the 4,000MW Etalin and 500MW Attunli hydropower projects, as reported by Mint on 13 May. Since then, although the power ministry has been lobbying on behalf of NTPC, it has not been able to make any headway.
Energy powerhouse: The Lower Subansiri project in Arunachal Pradesh. According to the Central Electricity Authority, the state has hydropower potential of around 50,328MW, the highest in the country. (Indranil Bhoumik / Mint)
“Cancellation of contracts is (a) very hard step. We have spoken to the Arunachal Pradesh government and even held a meeting with them. Taking away the projects from NTPC and re-awarding them will not create investor confidence. We want NTPC to develop the projects with the full support of the state government,” the power ministry official said.
On his part, R.S. Sharma, chairman and managing director of NTPC, said, “We are meeting the Arunachal Pradesh chief minister (Dorjee Khandu) on 8 August in Itanagar. We have already written to the state government explaining our point that let the techno-economic viability of the projects be established. After that, we will make the payments as done by NHPC.”
NTPC signed an agreement on 21 September 2006 with the state government to implement the projects. Other state-owned firms that won similar projects from Arunachal Pradesh at the same time were NHPC Ltd, earlier known as National Hydroelectric Power Corp. Ltd (4,500MW) and North Eastern Electric Power Corp. Ltd (1,230 MW).
The state cancelled the contract after NTPC, India’s largest power generation company, refused to pay an advance of Rs5 lakh per megawatt as upfront payment for the two projects. While NHPC, also run by the Union government, paid up, NTPC declined citing Central Vigilance Commission guidelines.
“This is a big setback for NTPC as these are big projects and would have transformed the company’s hydropower project portfolio,” said Anish De, chief executive at energy consultancy Mercados Asia.
“It is understandable that they are trying every means at their disposal to get the projects. These are difficult projects, and it will be challenging for even the private sector to implement them,” he said.
NTPC has a power generation capacity of 29,394MW, which it plans to increase to 50,000MW by 2012. It has bet big on hydropower generation in an attempt to become an integrated energy utility with a diversified fuel mix. Of the 20,606MW it plans to add, 2,806MW will be from hydropower. The company registered a net profit of Rs7,129.30 crore on revenues of Rs37,004.60 crore in the fiscal year to March.
According to apex power sector planning body Central Electricity Authority, Arunachal Pradesh has hydropower potential of around 50,328MW, the highest in the country.
It is easier to set up thermal plants than hydropower projects because it is far more difficult to prepare detailed project reports, react to environmental surprises such as floods and deal with thorny issues of relocation and resettlement, all of which delay these projects, typically located in mountainous and hostile terrain.