Arunachal Pradesh to pitch for equity in hydro power projects

Arunachal Pradesh to pitch for equity in hydro power projects

The government of Arunachal Pradesh is discussing with financial institutions ways in which it can acquire equity stakes in hydroelectric power projects being developed by Central public sector units in the state.

“We plan to either convert the 12% (of the generated power) free power that has been given to us into an equity share or put in our own money into the projects. We are presently in discussions with the financial institutions to work out a strategy about which of these options are more beneficial to us," said T. Norbu, Arunachal Pradesh power secretary.

Free power is given to states where such projects are based, because these projects entail large-scale relief and rehabilitation efforts and costs to the local environment.

The quantum of free power given to the states may be increased following demands by Arunachal Pradesh, Uttarakhand, Himachal Pradesh and Sikkim for the same, as reported by Mint on 12 June.

“It (Arunachal thinking of an equity stake in projects based in the state) is a good thing and will help the state government get a sense of ownership. If the state puts in its own money, the contribution from the developer (PSU) will come down which in turn will help it (the state) to earn more from the project. Having an equity stake in the project will also allow the state to leverage things in terms of employment among others to its advantage," said K. Ramanathan, distinguished fellow at The Energy and Research Institute.

Some of the big ticket hydro projects being developed in the state include NTPC Ltd’s Etalin (4,000MW), and Attunli (500MW), National Hydroelectric Power Corp. Ltd., or NHPC’s 4,500MW one and North-Eastern Electric Power Corp.’s 1,230MW project.

“The percentage of our stake in the projects will depend on our ability to take such stakes which in turn will depend on our financial health," said a senior official in the state government who did not wish to be identified.

The state’s gross fiscal deficit is 12% taken as an average over 2001-04.

The total hydropower generation potential of India’s North-Eastern states, and Bhutan, is about 58,000MW. Of this Arunachal Pradesh alone accounts for 50,328MW, the highest in India.

The state has bet big on the hydro power development in the region and has attracted a lot of private sector developers.

At present, India has an installed power-generation capacity of 130,000 MW, of which around 32,325.77MW is generated through hydroelectric power projects.

The 11th Plan (2007-12) has projected that the country will add 78,577MW of power generation capacity, of which around 16,000MW is expected to come from hydroelectric power projects.