Power Sector in J&K: Long-term Vision, Short-term Solutions

Power Sector in J&K: Long-term Vision, Short-term Solutions

Let’s talk about what we can and must do rather than when NHPC will return our projects

 Power business is no easy business in India. A quarter of a century has passed since power business was liberalized in India, yet there has been little success vis-à-vis the twin objectives of increased generation and efficiency.  To cut it short, the fact remains that power business is difficult both because of intensive technology that is required as well as the risks involved in the business. The Indian power sector has over 5 Lakh crore of outstanding debt and nearly 3 Lakh crore of accumulated losses which increase by about 60000 crore each year.

Within electricity sector Hydropower is perhaps the most risky business. All that is desirable may not always be technically feasible. The moot question remains that with over 16000MW of techno-economically viable projects, are we in a position to take up these projects on our own looking at the state of our economy, or can we think about other options as well? Considering 70:30 debt to equity ratio we would still require around 35000 crores to develop this capacity and it will take a lot of time.

Jammu and Kashmir needs immediate solutions to its power problem and a long-term vision to develop power projects so as to become a power hub and sell electricity to other states or countries. The present condition of power sector is almost similar to what Gujarat faced in 2001. With 2246 crore losses in 2000-01, Gujarat faced similar power shortages like J&K is today. Gujarat neither had funds to add generation capacity nor was any private player ready to invest in the state. When Manjula Subramaniam took over as the chairperson of Gujarat State Electricity Board (GSEB), things seemed to be in disarray. Rather than blaming others, Manjula took the task of setting her house in order. She renegotiated power purchase agreements, renegotiated interest on loans, convincing banks to lower the interest rates which were earlier negotiated at 18%, unbundled the sector to identify the weak points and employed a consultant to look into employee morale boosting. Today Gujarat is among the few states in India where power sector is making profits. The state has been making profits in power sector uninterruptedly since last nine years.

As short term measures, the J&K state government can take the following steps:

1) Try to develop the thermal power project in Orissa as soon as possible for which the coalmine has been allocated already. There has already been a lot of delay regarding this project. The major advantage is that thermal plants take less completion time and electricity cost is cheap. This would end our woes within a few years if execution is done as per industry standards, unlike in J&K. 

2) Develop solar parks. As solar is highly location dependent and two independent surveys have put J&K on 1st and 2nd position regarding solar power potential in India, J&K state should identify the most useful sites, earmark the sites for itself and begin producing electricity. Over the years the installation costs of solar have reduced considerably and the cost per MW of electricity is around 6 crore which is cheaper than Hydro in most of the cases.

3) Plug Transmission and distribution losses. For this the effective utilization of 3115 crore, which has been approved by the centre under Restructured Accelerated Power development Programme (R-APDRP), is necessary. J&K has the highest Transmission and Distribution (T&D) losses in the country at 59.72%.

4) Unbundling of power department is a must if loopholes are to be identified and the system set right once for all. The opposition to this by certain people is unfortunate and linking this to return of power projects by some vested interests is unfortunate for the power sector of the state.

In the long term the state government can formulate a plan for being the energy hub which could supply power to other Indian states as well as other countries which are power deficit in our neighborhood.  Once we improve the health of our state power department, many investors would feel confident and invest money in Hydro sector and other sectors like wind, solar and geothermal as well, all of which hold huge potential in J&K but are rarely talked about. For now let’s talk about what we can do and must do rather than when NHPC will return our projects. Of course that can be talked about as well, but not at the cost of the entire power sector in J&K.

(Hakim Iqbal works as a power engineer in NTPC Limited, Surat, Gujarat)