Uttarakhand is joining hands with other hill states to demand a 50% increase in free power from hydroelectric power projects located within their borders.
At present, these states are allocated 12% free power.
“We want 18% free power as, for the hill states, it is the only source of income. However, we are yet to receive any positive indication from the Union government” said B.M. Verma, chairman and managing director, Uttaranchal Power Corp. Ltd.
He argued that as setting up a hydroelectric power project includes relocation and resettlement costs to the states, such a demand was entirely justified.
The other states that are demanding more than 12% free power include Arunachal Pradesh, Himachal Pradesh and Sikkim.
Uttarakhand is among those few states in the country where the entire power capacity is hydel-based.
As a result, cost of electricity is relatively cheaper than the gas- or coal-based power projects. The state has a total installed power generation capacity of 1619.4MW, of which the share of state utilities capacity is around 1,000MW and the balance is made up by the central and private sector power utilities.
Anjan Ghosh, the head of corporate sector ratings at credit rating firm Icra Ltd said, “Such a claim is justified, if the state government creates a conducive environment for the projects in terms of providing them with quick clearances and there are no issues in terms of land acquisition.”
According to Kuljit Singh, partner at accounting firm Ernst & Young, “These demands are a function of two things—upfront premium per MW paid to the state along with the percentage of free power. The 18% free power is being demanded where the upfront premium is not huge. If there is a case for large infrastructure requirements and poor hydrology (assessment of water flow and silt levels), there will be reluctance to provide 18% free power by the developers.”
Uttarakhand is currently facing a 250MW shortage. “Poor inflow of water has resulted in lower efficiency of our hydroelectric power projects,” Verma said.
At present, India has an installed power-generation capacity of 1,27,673MW. Of this, around 32,325.77MW is generated through hydroelectric power projects.
The 11th Plan (2007-12) put out by the Planning Commission has projected that the country will add 68,870MW capacity, of which, around 16,000MW is expected to accrue from hydroelectric power projects.