Author: Saadut
•1:04 PM
Hum ko mayasar nahee mitti ka deya bhi
Gharr Peer ka hai roshan bijli ke charagoo se (Iqbal)

While Kashmir power projects lights homes outside the state, its own habitations continue to reel under darkness. Jammu & Kashmir has abundant water resources yet it continues to be severely energy deficient for its own use. The state has an estimated hydro-power potential of 20,000 MW’s (megawatts) of which 16480 MWs have been identified. Out of such huge identified hydro power capacities only 2318.70 MWs (14 percent of the potential) have been exploited so far.

The 2318.70 MW utilized generation capacities in J&K,  state sector has only 758.7 MW’s from 20 projects which includes the 450 MW Baghlihar Phase-1  while NHPC has control over the major part of power generation in the state. The 1560 MWs of NHPC power generated in J&K include 690 MWs Salal Hydel Electric project, 480 MW Uri Hydel Electric Project and the 390 MW Dulhasti MW. There two private sector power projects generating 17.5 MWs.

NHPC is constructing seven more projects in J&K with a generation capacity of 2,797 MW where the state shall have only a 12% stake, which is far below the practice in other places where such projects are executed on a 50-50 generation partnership.

During the PDP led government in 2007 a three member ‘State Finance Commission’ team was constituted to suggest measures for equitable development of all regions of the state. The Commission submitted a report to the government pointing to the colossal losses the state suffered on account of IWT (Indus Water Treaty) and exploitation of state’s water resources by NHPC. The Commission pointed out to the economic losses incurred by the state for the last six decades due to exploitation of its water resources were huge and recommended increase in the royalty from power projects being run in the state by NHPC, which was at a meager 12%, for compensating the losses.

Locally the NHPC has also been referred to as the ‘East India Company of Kashmir’ for the manner in which it has been exploiting water resources of J&K with the state hardly benefiting from these projects. In fact a senior minister of the present government Mr. Taj Mohi-ud-Din in June this year said that NHPC is “behaving like the East India Company in Jammu and Kashmir and draining the state’s power potential.” NHPC has also been accused of ignoring local employment opportunities in its projects in J&K, most of its workers having been drawn from outside the state while as NHPC is supposed to take 50 percent staff from the state (as per 1975 orders).

Salal Puzzle:

According to sources the Salal power project was started in 1973 by the Union ministry of power and irrigation (GOI) while the NHPC was formed in 1975. As per the decision of the state cabinet (537 taken on 15 December 1980) it was conveyed to GOI that NHPC should be allowed to go ahead with the project, provided it agreed to share the generated power & profits with the state on a 50-50 basis, but till date the state has been only getting 12% of the generation. As if the low royalty issue was not enough, the state has not been handed over the project which should have been done in 2003 after the stipulated depreciation period was over and against a payment of 10% of the project cost ( as per the JKSE Act 1971). Attempts by the state authorities to get back Salal project as per set agreement have not yielded any results with New Delhi.

Indus Water Treaty (IWT), India Pakistan and Kashmir waters (1960):

After India and Pakistan gained independence, water sharing became a contentious issue between the two neighbors. 1960 Indus Water Treaty (IWT) was arbitrated by the World Bank (then the International Bank for Reconstruction and Development). As per the treaty India holds exclusive rights to three major rivers of Sutjul, Beas and Ravi, while Pakistan has the rights to three large rivers Indus, Jhelum and Chenab that flow from Indian part of Kashmir. This treaty has denied the Kashmiri’s any right to harness the hydro potential of these rivers, depriving them of opportunities. According to some reports the state is incurring a loss of 6500 crores annually due to the IWT between India and Pakistan. The losses are not only felt in the power generation sector but also the agricultural sector. Due to the restrictions of efficient water management put on Kashmir due to IWT the state has not been able to harness its agricultural potential fully as a result of which the state imports food grains worth Rs 1200 to Rs 1400 crore annually.

In Kashmir, Delhi is seen as controlling the power generation projects in Kashmir and not allowing the state to develop such projects on its own. This move is also seen as a potential geo strategic leverage Delhi might use to deal with Pakistan at the cost of Kashmir. J&K government had some time back secured funding from various IFI’s (international financial institutions) to construct hydroelectric projects in the state, including the Kishenganga project in north Kashmir, but New Delhi refused to give counter guarantees. The refusal effectively put brakes on attempts at power sector self reliance within the state using its own resources, and such a move by New Delhi ended up with the project being handed over to NHPC which is already criticized in the state for exploiting the energy resources of J&K.

The irony :

The deficit in state’s power sector is likely to touch Rs 1,800 crore, the T&D losses (Transmission and Distribution) hover around 60 percent for 2011-12. In projections made by the state’s Power Development Department (PDD) the power purchase cost of the state is likely to jump to Rs 2,944 crore against the expected revenue of Rs 1,136 crore. The losses are not only because of non realization of set revenue targets, the recurring T&D losses (67.50 % for 2006-07, 61.90 % for 2007-08, 61.31 % for 2008-09 and 65.78 % for 2009-10) but also the high costs that the state has to pay for the electricity that it buys from NHPC. NHPC sells the same power to the state at astounding rate of Rs 8-12 per unit which it generates in the state at around 60 paise. Such an arrangement where the state has to buy back its own power at almost 24 times the production cost can be best described as anarchic.

Civil society members have pointed out that the Rs 19,000 crore power generation plan under the Prime Minister’s ‘Economic Reconstruction Programme’ meant for J&K has actually benefited NHPC. According to reports the Prime Minister grant for power sector in the State under Prime Minister’s Economic Reconstruction Program never reached the State exchequer, instead went to the NHPC account. Voices from the state have already been raising objections to this diversion. In fact a representation of civil society group has recently filed an RTI to get information regarding the status and details of three major power projects under the control of NHPC in Jammu and Kashmir.

This summer the power requirement of the state pushed up to 2300 MW while PDD (Power Development Department) was able to only manage 1500 MW. As per sources against a peak summer power demand of 1300 MW for Jammu PDD could only provide almost 600 MW and against a power demand of 800 MW in Kashmir the department (PDD) supplied only 400 MW. The condition in Kashmir during winter months worsens when power requirement goes up and generation on the ‘run of the river’ power projects in J&K dwindles sharply, leaving many areas without electricity for major periods.  

Owing to the mess that the power sector in J&K is in, there are severe power shortages in the state and curtailment is a norm here especially in the Kashmir valley. Some areas of the capital Srinagar have been known to reel under 12 hour power cuts, and almost all areas have load shedding schedules in place. Even thought the first power house came up in Kashmir in 1905 which boasted of being South Asia’s second only Hydro Power House at that time, but more than a hundred years later there are many areas of the state where electricity has not reached yet.

Private Investment:

The policy to lease out the work in the power sector to private players was adopted in 2003. The Athwatoo Hydro Power Project in Bandipora with a capacity of 12 MW is seen as a good start to the private sector venturing into power projects of the state. Constructed at a cost of 77 crore rupees and was build in the stipulated time frame, the ASHP (Athwatoo Small Hydel Project) has been built by a local Kashmiri entrepreneur. Originally the state PDC (power Development Corporation) had put the potential of this power project at 7.5MW, but when the local entrepreneur got a fresh survey done by experts the project turned out to be 12MW. The state of art ASHP is managed and maintained by its parent company involving local employees and has been marked as a green project which is likely to earn carbon credits.

Committees formulated but no action:

In March 2005 Prime Minister Dr Manmohan Singh appointed Dr Rangarajan head of an 11-member task force to frame a long-term plan for the integrated social and economic development of J&K. The objective of the committee was to identify finance opportunities for development of the state.

In October 2004 the state government formally approached the Prime Minister to transfer overdue Salal Power Project (owned by NHPC) in J&K. Reluctance from ministry of power GOI to act on this, the PM send this requested to Dr Rangarajan for report and analysis. After due study Dr Rangarajan suggested that New Delhi offer J&K an alternative package in lieu of the Salal Power project that would make the 450-MW Baglihar debt-free from day one of its commissioning.

The Ministry of Power GOI after receiving the said report rejected the transfer of Salal to Kashmir and also the alternative proposed thereby leaving the state in a limbo.

As a part of final report submitted by the ‘11-member task force’ headed by Dr Rangarajan the energy sector again was as a part of the core recommendations. It was suggested that New Delhi transfer the 330-MW Dul-Hasti power project back to the state and also recommended the shifting to 1020-MW Bursar project along with the funds to execute it, to the state from NHPC. Incidentally the Bursar project was given to NHPC by Dr Farooq Abdullah. While the report and recommendations of the Dr Rangarajan task force were accepted but its recommendations were not implemented!

There is no surety when and if the state government will be able to get back what rightfully belongs to the state. NHPC with the backing of central government is in no mood to hand over the power projects back to the state even after the stipulated period, the losses incurred by J&K due to the IWT are likely to mount and till then there are more dark times for the people of J&K.

2nd September 2011

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