The Union power ministry is lobbying on behalf of NTPC Ltd asking the Arunachal Pradesh state government to not re-tender Rs22,500 crore in hydroelectric projects that were earlier awarded to the company, India’s largest power generation utility.

Integrated player: NTPC is betting big on hydro-power generation. The company currently has an 800MW hydel project that is under construction at Koldam in Himachal Pradesh.

“We have spoken to the Arunachal Pradesh state government and are trying to impress upon them that taking away the projects from NTPC and reawarding them will not create investor confidence not only in the state, but also in the country. We are trying to impress upon them that let the detailed project report (DPR) be prepared and then NTPC will make the payments on the lines of National Hydroelectric Power Corp. Ltd (NHPC)," said a senior power ministry official, who did not wish to be named.

Arunachal Pradesh wants NTPC to pay Rs5 lakh per MW as the upfront payment for the two projects at Etalin (4,000MW) and Attunli (500MW) at an estimated total investment of Rs22,500 crore.

Other state-owned firms that won similar projects from Arunchal Pradesh at the same time were NHPC for 4,500MW and North Eastern Electric Power Corp. Ltd,for 1,230MW.

While, NHPC has made the payments, NTPC had declined to do so citing Central Vigilance Commission guidelines.

The state government had earlier said that it plans to scrap the hydroelectric projects awarded to NTPC, because the state-owned firm was not “keen and committed to develop the projects" as reported by Minton 16 October.

“This is no stage of demanding the payment as even the DPR is not prepared. Let the DPR be prepared and the viability of the project be established, then we will take a decision," a senior NTPC executive, who did not wish to be identified, said.

There is already a delay in NTPC’s projects as the agreement was signed way back in September 2006. Such delays have become a norm in the Indian hydro power sector, with the country unable to meet even half its target of 14,393MW set for hydro-power generation in the 10th Plan (2002-07).

Of the country’s 135,000MW power generation capacity, only 32,000MW is based on hydro power. India is seeking to add 78,577MW of generating capacity in the next five years, 16,553MW of it expected to come from hydro projects.

Experts believe developing the hydro power sector in India is complicated as it needs involvement and commitment on the part of the state governments. A large part of this hydro power potential (58,000MW) is based in the north-eastern states, including 50,328MW in Arunachal Pradesh.

“There are a lot of problems with the hydro projects. It does not get easier as they are a state subject," Kirit Parikh, member (energy), Planning Commission, had earlier said.

NTPC has bet big on hydro-power generation in an attempt to become an integrated energy utility with a diversified fuel mix. The company currently has a hydel project (800MW) that is under construction at Koldam in Himachal Pradesh.

NTPC currently has a power generation capacity of 27,404MW, which it plans to increase to 50,000MW by 2012. Of the 22,596MW it plans to add, 15,180MW will be through coal-based power generation, 4,550MW through gas-based generation and the balance from hydro power.