India exploring merger of state-owned hydropower PSUs3 min read . Updated: 28 Jul 2014, 01:17 PM IST
The exercise is aimed at stemming the decreasing share of hydropower in the country's energy mix
New Delhi: In what may lead to a major overhaul of India’s hydropower sector, the National Democratic Alliance (NDA) government is exploring the possibility of a merger of all state-owned hydroelectric companies that include NHPC Ltd, THDC India Ltd, SJVN Ltd and North Eastern Electric Power Corp. Ltd (Neepco).
NHPC has been asked to examine the possible merger of all the four hydropower central public sector units (CPSUs) into one in an exercise aimed towards stemming the decreasing share of hydropower in the country’s energy mix. To be sure, there is no immediate proposal before the government.
“The issue was first raised at a presentation made to Piyush Goyal, minister in charge of power, coal, and new and renewable energy, earlier this month," a government official said, requesting anonymity. “The minister has asked for a concept paper, which has been prepared. A committee has been formed for this ambitious exercise."
There have been concerns raised about faltering hydropower generation in the country and delays in project execution. India has a power generation capacity of 249,488.31 megawatts (MW), of which 16.3% or 40,730.09MW is hydropower. Hydropower is the ideal solution for meeting peak demand as it is relatively easier to switch on and off, compared with thermal sources.
Goyal declined comment on the matter. Another government official confirmed the possible strategy. “The new government is looking at synergies and best practices across the PSUs (public-sector units) that can be leveraged," the official said, declining to be named.
The strategy of having a single state-owned hydropower firm stems from the fact that India has been unable to tap its hydropower potential to the desired level. A single entity may help in a concerted effort for developing such generation in the country and will contribute towards developing the strategic projects in Arunachal Pradesh. The plan to be explored could be carried out in a phased manner.
A majority of India’s hydropower projects under construction have been delayed, hampering the government’s bid to increase power generation in order to meet demand and boost economic growth.
“Given that about 70% of all India hydro-based capacity is in north and southern region, utilities in states such as Uttarakhand, Odisha, Karnataka, Himachal Pradesh, Kerala and Meghalaya have a relatively higher dependence on hydropower sourcing, which varies between 20% to 80%," rating firm Icra Ltd said in a 22 July report.
Hydropower projects bordering China have also acquired a strategic dimension. Of the eight river basins in Arunachal Pradesh, Subansiri, Lohit and Siang are of strategic importance as they are closer to the border with China. Any delay in executing these projects, particularly on the rivers originating in China, will affect India’s strategy of establishing a prior-use claim.
Under international law, a country’s right over natural resources it shares with other nations becomes stronger if it is already putting these resources to use. China has 36 projects on rivers upstream of the Brahmaputra, of which 30 have been completed.
The push for hydropower is also aimed at expanding the electricity user base in the country. India’s per capita power sector consumption, around 800 kilowatt hour, is among the lowest in the world, according to the World Bank. Around 600 million Indians do not have access to electricity and about 700 million Indians use biomass as their primary energy resource for cooking, according to the Planning Commission.
The Bharatiya Janata Party, which leads the new government, had made energy security a part of its poll plank. The Narendra Modi-led government’s energy security plans include harnessing renewable sources such as solar energy, biomass and wind power along with coal, gas, hydropower and nuclear power to bring about an “energy revolution" in the country.
Executing a hydropower project is a time-consuming and tedious process. It includes a thorough survey and investigation, detailed project report preparation, relocation and resettlement of the affected population and infrastructure development.
Developing hydropower will also help reduce dependence on coal, which is in short supply domestically, requiring imports of the mineral to fuel most of India’s power plants.
India, which is dependent on imports to meet its energy demand, has an energy import bill of around $150 billion. This is expected to reach $300 billion by 2030, requiring a $3.6 trillion payout by 2030.