Satluj Jal Vidyut Nigam Ltd likely to start joint venture with state’s Power Development Corporation
Decks are being cleared for entry of yet another central hydropower company like NHPC into J&K to partake in joint venture projects with state Power Development Corporation (PDC) which has the potential to execute power projects on its own.
An official revealed preparation was going on for setting up a joint venture company between PDC and Satluj Jal Vidyut Nigam Ltd (SJVNL) for setting up of 1856-MW Sawlakote hydropower project.
He said the union power ministry and the J&K power department have already started deliberations about bringing SJVNL into the state.
Established in 1998, the SJVNL is a Joint Venture company between union power ministry and government of Himachal Pradesh.
The largest ever power project to come up in the state, Sawlakote is a state-owned project that was cleared by union power ministry in April.
Last week, the official said, a meeting between officials from union power ministry, SJVNL and state power ministry was held at New Delhi to discuss modalities for setting up the joint venture company.
“The equity pattern, shape of the company and related issues were among modalities discussed during the meeting,” the official said.
Another senior official said the joint venture would be a “deathblow” to the PDC which has proven its “capacity and mettle” to build and operate such hydropower projects.
He said it took PDC more than 30 years to take Sawlakote to the stage it is at today and suddenly an “outsider is being offered it on a platter”.
“It (the JV) is coming up at the cost of the PDC and by allowing it we are not sending good signals about the capability of the PDC,” the senior said.
The government of India’s National Hydroelectric Power Corporation (NHPC), another central public service undertaking (CPSU), is already operating eight projects in the J&K with a cumulative capacity of 2339-MW, which sums up to more than 1/3rd of the total of 7047-MW hydropower generated by the it in other states.
A joint venture company already exists between PDC, NHPC and Power Trading Corporation (PTC) that was set up in 2011 for execution of hydropower projects on Chenab basin with a vast hydropower potential.
The Chenab Valley Power Projects Ltd (CVPPPL), comprising these three corporations is executing three major projects with a capacity of 2100-MW.
According to a memorandum of understanding, the PDC and NHPC have has a share each of not more than 49 percent in the company, the CVPPPL.
The J&K state’s PTC has a share of mere two percent in the company.
“The issue is not only that the CPSUs become partner in energy generating from the projects, we are handing them a share from vast hydro resources which belong to the state. They become a partner to our resources,” the first official said.
Another official confirmed the issue to allow central PSUs establish in J&K for setting up the projects was under consideration for long time.
On 11 October 2017, a five-member Group of Ministers (GoM) of J&K held a meeting to expedite execution of the power projects. Led by then deputy chief minister Nirmal Singh the meeting was among others attended by Amarjit Singh union secretary water resources.
According to the minutes of the meeting, Singh delved into the 20,000-MW hydropower potential of the state and underscored expertise and substantial financial resources were a “major impediment” to fast-track harnessing the potential.
Singh presented the Indo-Bhutan hydropower cooperation as a “classic example of win-win situation which can be replicated in J&K.”
“There already exist five public sector undertakings Tehri Hydro Development Corporation (THDC), NHPC, SJVNL, National Thermal Power Corporation and North Eastern Electric Power Corporation Limited under power ministry,” he told the meeting, adding these CPSUs have specific expertise to design and implement large hydropower projects and have manpower at their disposal.
“Thus government of J&K can quickly form a joint venture with CPSU of its choice to develop these hydropower projects in the state.”
Under the proposed arrangement the meeting was told that each project shall be financed under debt equity ratio of 70:30 and the state can provide land for the projects as part of its share of equity and tax exemption for plants, construction material, equipment, machinery and services until commercial operations for the projects begin.
The debt for the projects, according to the minutes, shall be raised on the JV Company for which government of India may provide necessary support by making the debt component available on attractive terms.
“At the end of the concession period the partner CPSU shall transfer its entire stake in the project to the state at no cost and the project ownership shall then be fully vested with government of J&K,” the minutes of the meeting read.
The then finance minister Haseeb Drabu, one of the members of group of ministers, had raised objections, stating the state government’s experience with CPSUs was not “that encouraging”.
Other members of the group of ministers included Sham Lal, Naem Akhter and Sunil Kumar.
“The finance minister also highlighted the ownership aspect of projects particularly in the context of the demand for certain NHPC (old) projects back to the state. The finance minister suggested that (instead) ‘investor developer’ model be explored as an alternative.”
Officials say the proposal was now being revisited to allow the CPSU to enter J&K, a state with abundant water resources.
At present SJVNL is operating India’s largest, the 1500-MW Nathpa Jhakri hydropower station, according to its website, and operates an installed capacity of 1964-MW.
“If the proposal matures then more projects like 930-MW Kirthai-II and 390-MW and 850-MW Rattle may also fall in the kitty of this company,” said the official who revealed the ongoing deliberations were not in the best interest of the state.
He said the state government’s non-seriousness to encourage the PDC to arrange resources from financial institutions was the “biggest impediment” in harnessing J&K’s existing hydropower potential.
“We have proved our worth by setting up 900-MW Baglihar I and II. Financial institutions within and outside India are ready to finance construction of these projects, but it needs seriousness on part of the state government which is lacking because of unknown reasons.”