Home / Industry / Energy /  India to start Kishanganga project construction

New Delhi: India will shortly start construction on the 3,642.04 crore Kishanganga hydropower project with the International Court of Arbitration at The Hague having ruled in its favour.

Pakistan had questioned the “legality of the construction and operation of an Indian hydro-electric project" under the Indus Waters Treaty of 1960. India had said that building the dam was within its rights.

The treaty regulates the use of Indus river waters by India and Pakistan. Pakistan’s argument was that the Indian project would affect the Neelum-Jhelum project constructed by Pakistan downstream of the Kishanganga project.

“We will start work on the project immediately," Jyotiraditya Scindia, minister of state for power with independent charge, said on Friday. The project comprises 3 units of 110 megawatts (MW) each, he said.

The project located in Baramullah in Jammu and Kashmir involves the diversion of the Kishanganga river, a tributary of the Jhelum into an underground powerhouse near Bandipur and the discharge of the water into the Wular lake.

The court said on 18 February that the 330 MW project was a run-of-river project. “India may accordingly divert water from the Kishanganga/ Neelum River for power generation by the Kishanganga Hydro-Electric Plant and may deliver the water released below the power station into the Bonar Nallah," it said.

The court added that, “India is however under an obligation to construct and operate the Kishanganga Hydro-Electric Plant in such a way as to maintain a minimum flow of water in the Kishanganga/Neelum River, at a rate to be determined by the court in a final award."

The state-controlled NHPC Ltd project involves construction of a 37 metre tall concrete dam. While work was stopped on the dam due to the arbitration initiated by Islamabad in 2010, work continued on the 24 km long head race tunnel.

“We are awaiting orders to start construction on the dam. The contention was on the dam. Other work was on," said a senior NHPC executive requesting anonymity.

The civil construction work for the project was awarded to Hindustan Construction Co. Ltd, the lead partner for the project. While planning, design and engineering is being undertaken by the UK’s Halcrow Group, tunnelling, electro mechanical and hydro mechanical work is by Italy’s Seli SpA, state-owned Bharat Heavy Electricals Ltd (Bhel) and Germany’s DSD Noell, respectively.

While the project is expected to be commissioned by 2016-17, India has already spent 1,390.53 crore on it. The first year tariff is expected to be 2.99 per kWh (kilowatt-hour) with the average tariff set at 3.29 per kWh.

Scindia added that his ministry is also trying to expedite the construction of hydropower projects in Arunachal Pradesh.

“Hydropower projects do face the issue of concerns towards the environment and local issues. However, those issues are project specific," he said. “It is important to get those (Arunachal) projects on-line and if there are issues I will be more than happy to resolve them."

Any delay in the construction of hydropower projects in the region, particularly on rivers originating in China, will affect India’s strategy of establishing its prior-use claim, according to international law. India is concerned that hydropower projects planned in Arunachal Pradesh may be affected by China’s plan to divert water from rivers that flow into the Brahmaputra to the arid zones of Xinjiang and Gansu.

“We have a capacity of 1,05,000 MW in Arunachal Pradesh. We are doing no way close to that. A large number of projects have received environmental clearance which we are fast tracking. There are close to 49 projects in the pipeline for EC (environmental clearance) and FC (forest clearance). We are processing them as fast as we can," Scindia said.

In other developments, Scindia said that the transitional funding mechanism for the bailout proposed for debt-laden electricity distribution companies (discoms) through a revamp of short-term loans will be finalized shortly. Discoms owned by state governments are finding it difficult to raise working capital and owe 2.46 trillion to lenders.

“Everything is committed and done as far as the states are concerned... Out of 1,75,000 crore short-term liability, 1,30,000 crore is on board," Scindia said.

In a significant development, Scindia said that to resolve the issue of coal quality, there will be a third-party audit of the fuel supplied by state-owned Coal India Ltd. (CIL).

“There will be a clause in the FSA (fuel supply agreement) which has never been done before. So CIL FSAs from now on will carry a clause that will say that from September 2013, we will put in place a third party audit system to monitor the quality of coal. It will be the same FSA for both public and privately-owned utilities," he said.

This comes in the backdrop of FSA for 14,000 MW between state-run NTPC Ltd and CIL yet to be signed due to divergence on the issue of coal’s calorific value. Coal India has shifted to a new pricing mechanism based on gross calorific value, under which prices are linked to the calorific value, or quality, of coal. Also, NTPC has been deducting money from the fuel bills raised by the coal miner on grounds that it has been supplied low-grade coal.


Utpal Bhaskar

"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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