Rattling the Rattle

JK state lacking financial muscle is no justification for banking on GOI subsidiary-NHPC. Baglihar HEP financing was successfully arranged with funds raised from a consortium of banks.
Rattling the Rattle
Representational Pic

Rattle hydroelectric power project (Rattle HEP) is being rattled by excessive power play around it. It has been rubbished to an extent, where it is difficult to predict that what is proposed could be the final deal. And, what is proposed could be in the interests of people of JK state. The latest reports indicate that gubernatorial administration is clearing decks to hand over Rattle HEP to National Hydroelectric Power Corporation (NHPC). Given the highly contested, one-sided deals, the state has had with NHPC, it was least expected that state would return to conclude a deal with it. The past deals have resulted in state getting crumbs in return of handing over its precious resources to the corporation—a subsidiary of GOI. The interests of the state are being made subservient to the interests of hegemonic agency.  True, the state finances are anemic, but difficulty in raising finances should not be an excuse to hand over precious resources on a platter to be exploited. If Baglihar power project could be completed by the state raising resources on its own, why not rattle HEP? Why was it rattled, time and again, in spite of posing lesser technical snags in a widely circulated initial assessment? It was taken to be attractive, viable and doable.       

This is not the first time that a fresh proposal has been floated. The proposals in fact have been renewed repeatedly. Rattle HEP construction was conceived on River Chenab at Drabshala in Kishtwar. It was slated to be completed in 2017 at an estimated cost of Rs. 6000 crores. Far from it, in 2019 the state is still grappling with giving the project the needed push. And, in the meantime costs have escalated, taxing the state further. Rattle HEP was allotted to Hyderabad based M/s GVK on BOOT (built, own, operate, transfer) basis in 2010 for 35 years. It was the first hydroelectric project which was given for implementation through tariff based international competitive bidding in which Power Development Corporation (PDC) would get 15 percent generation as royalty and enjoy first right to purchase for 55 percent generation at the rate of Rs 1.44/unit. M/s GVK however abandoned the project in July 2014 following controversy over tariff rates, taken to be high.  It took the government more or less three years to finally terminate the contract with the company. The termination came on February 2, 2017; vide order No. 23-PDD. The delayed termination stands largely unexplained.

JK state government subsequently tabled economic survey in the budget session. It read, "The PDC has been assigned by government as implementation agency to find other mode of execution of the project." It was put forth that JK state government is all set to handover construction of 850 MW Rattle HEP to JK State Power Development Corporation (JKSPDC). However, with BJP withdrawing support to coalition government with PDP, the governor raj floated the proposal of Joint Venture Company with an undisclosed Public Sector Unit (PSU) of GOI. The proposal was accorded sanction by State Administrative Council (SAC) in its 5th of September 2018 meet. Five models were proposed by state administration in November 2018 to union power ministry. The proposal entailed 15 percent to 25 percent free power to JK state. The ownership propositions proposed between the state and the ministry were—90:10, 75:25 and 51:49. Under 90:10 pattern, the free power proposed was 15 percent, while under 75:25 and 51:49 models, the percentage of free power suggested is 15 and 25 respectively. Under each of the models, the project had to be returned to JK state after seven years of its commissioning. In marked contrast to the proposals floated, a joint venture company is being proposed, as per the latest information. 

In the joint venture, with reported backing of Prime Minister's office (PMO) and union power ministry, the NHPC would own 51 percent shares in the company while the PDC's shares will be 49 percent. And, to add salt to the injury, it has also been proposed that the project will be returned to the state after 25 years. Joint ventures in the state have been mostly shady deals. Chenab Valley Power Projects Ltd (CVPP) could be quoted as an example. It was conceived for execution of three power projects namely Pakal Dul, Kiru and Kawer with a cumulative capacity of 2120 MWs. It reserved 51 percent share for PSU's of GOI: NHPC (49%) and Power Trading Corporation (PTC: 2%) leaving JKSPDC with 49 percent, the majority stake is thus bound to prevail. CVPP was dubiously conceived; in spite of the fact that NHPC had earlier failed to execute Pakal Dul HEP allotted to it in 1999-2000 under Build, Operate and Transfer (BOT) basis and deserved to be set aside in any future deal for state power projects. Additionally, NHPC has failed to return power projects to state, as per the concluded agreements. There have project over-run costs incurred by the state, as NHPC in previous assignments failed to complete power projects within the stipulated time. There is no guarantee that the latest proposal, a repeat of CVPP could be different.  

JK state lacking financial muscle is no justification for banking on GOI subsidiary-NHPC. Baglihar HEP financing was successfully arranged with funds raised from a consortium of banks. The state could provide its own margin from the corpus, created out of the funds generated by collecting water usage charges, which as per the estimates of civil society formations could have accumulated to about Rs 5000/- crores. Such a funding measure was backed in recent past by JK Socio-Economic Coordination Committee (JKSECC), an amalgam of 27 civil society formations of trade, tourism, industrial, horticulture, travel, houseboat, transport chambers and associations. It needs to be given a serious thought, instead of banking on NHPC.  

Yaar Zinda, Sohbat [Reunion is subordinate to survival]

iqbal.javid46@ gmail.com  

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