Centre clears largest ever 1856-MW Sawlakote project

Centre clears largest ever 1856-MW Sawlakote project

Boost to J&K energy sector

In a major boost to the state energy sector, the central power ministry has cleared the largest ever hydropower project for J&K with installed capacity of 1856-MW.

The power development corporation (PDC) received the techno-economic clearance for the run-of-the-river Sawlakote project from the central electricity authority last week, said a senior official in the corporation which will own the project.

“It is a big step forward towards expansion of the hydro power sector,” the official said.

Coming up on the Chenab basin between the state-owned Baglihar and the NHPC-run Salal, the project has been approved at Rs 20,317.66 crore on 70:30 debt ratio and will be completed in eight years.

The Sawlakote was originally conceived in 1964 but it took authorities 24 years to come up with its first feasibility report before it got mired into controversies.

In April 2001 the state signed an MoU with a Norwegian company in presence of the Prime Minister in New Delhi for setting up the project. That time it was conceived as 600-MW project only.

The government, however, received setback when the CEA raised queries over its cost and noted that the project structure hasn’t been formulated in accordance with guidelines of the authority.

In 2004 when Mufti Muhammad Sayeed government assumed the charge, a panel headed by then economic advisor Haseeb Drabu in consultation with the experts approved increasing the capacity of the project to 1200-MW given the hydro potential in the state.

It meant the project would need more financing and expertise. The Norwegian company roped in two more companies, Mumbai based HCC and Turkish based Ozaltin to form Sawalkote consortium that was now to implement the project. A formal order was issued in 2005.

But when Ghulam Nabi Azad took over as Chief Minister, he constituted a cabinet sub-committee to recommend way forward on the project. 

The panel suggested for putting the project to international bidding and not developing through Sawlakote consortium in November 2006. The same month the consortium got the order stayed by the court and the case continued till February 2010 when the government was asked to consider implementation of the project through consortium.

By that time the National Conference government was back in power which formed a panel under chairmanship of then chief secretary which laid emphasis on framing the detailed project report as per recommendations of the CEA.

As the PDC finally approached the CEA for clearance, the government of India body observed that developing Sawlakote with 1200-MW capacity would be underutilization of the hydro potential in the state.

This prompted the PDC to go for fresh investigations and the capacity of the project was raised to 1856-MW.

Now, while completing the “dream project” in time bound-manner and arranging finances for its implementation are the biggest challenge for the government, at the same time the question remains whether power generated from Sawlakote will be competitive in the market.

As per the project report, its per energy unit cost is around Rs 4.5. “We are calculating this cost eight years down the line when energy demand would have shoot up. The project is not only economically viable but can boost state economy if government takes interests in its implementation,” said another PDC official.

But Ifthikar Drabu, who is in hydropower sector for many years, does not agree with this assertion. “Show me one project which the PDC completed in set timeframe? This sector has never been priority for the government,” Drabu said, adding that the project construction would spill beyond eight years.

“At its present cost,” he said, “the per megawatt cost of the Sawlakote is around Rs 11 crore (Rs 4.5 per unit) and by the time the project is completed, the per unit cost would go beyond Rs 8.”

He backed his argument citing years of delay beyond the targeted time the PDC has taken to implement any project which ultimately resulted in cost escalation.

“By the time the project is completed its overall cost will have soared to around Rs 30,000 crore and per unit cost will be Rs 10. When the government struggled to sell Baglihar-II power at Rs 4.5 who will purchase Sawlakote power at such higher rates,” he asked.

According to him the energy market has witnessed swift change from dependence on hydropower to solar and thermal energy. “The solar power generation cost has come down to around Rs 4 crore per megawatt while hydropower generation prices are soaring,” he said.