Shinde on hydel projects

Special Report Vol. 3 Issue No. 17

January 1 -15, 2007

This is what Minister of Power, Shri Sushil Kumar Shinde on Calling Attention Motion in the Lok Sabha by Shri Basudeb Acharia and Shri Tapir Gao, Members of Parliament, regarding situation arising out of handing over of some hydel projects in Arunachal Pradesh to private parties for which investment has already been made by the National Hydroelectric Power Corporation and steps taken by the Government in regard thereto.
“The Hydro Policy (1998) of the Ministry of Power, Government of India provides guidelines to the States on the allocation of hydro-sites to private developers through the MOU (Memorandum of Understanding) route for capacities upto 100 MW, and for allocation of capacities above 100 MW through the competitive bidding route. In the interest of transparency, there is a further requirement that even for projects allocated through the MoU route (i.e. of capacity below 100 MW), the developer must award construction-contracts following the International Competitive Bidding (ICB) process.

In the recent past, a number of States have started allocating hydro projects to private developers on considerations such as the quantum of free power to State, upfront payment, equity stake to the State and return of the project to the State after a certain period of time (i.e. on Build, Own, Operate and Transfer [BOOT] basis). Upto now, about 35 projects with an estimated capacity of about 10,000 MW have been allocated to the private sector by the Himalayan States, where most of the undeveloped hydro potential exists.

Recently, the Government of Arunachal Pradesh has allocated five large projects of capacities ranging from 500 to 1600 MW to private companies on considerations such as quantum of free power to the host State, free equity to the State Government and return of the project to the State Government after about 40 years. In doing so, two projects - namely 1000 MW Siang Middle (Siyom) of which NHPC had submitted DPR to CEA for concurrence and 1600 MW Siang Lower of which the DPR was in advanced stage of preparation by NHPC - were also allocated to private developers. At the same time, the Government of Arunachal Pradesh had also put on hold the allocation of projects to the CPSUs .

NHPC had brought this matter to the notice of this Ministry when the Government of Arunachal Pradesh was contemplating withdrawal of these projects for allocation to the private sector. The then Minister of Power had taken up the matter vide letter dated 3rd October, 2005 urging the State Government not to withdraw these projects from NHPC.

Subsequently, when this was brought to my notice, I had immediately taken up the matter with the Chief Minister of Arunachal Pradesh vide my letters dated 18th March, 2006 and 17th May, 2006 urging him to keep the above allocations to the private sector on hold till the issue was sorted out and invited the Chief Minister for an urgent meeting. Subsequently, I have held a number of meetings and as a result, the Government of Arunachal Pradesh have now allocated 5 projects to NHPC totaling about 8100 MW (including two projects totaling 3600 MW subject to settlement of certain environment related issues). In addition, the Government of Arunachal Pradesh have allocated to NTPC, two projects of about 4500 MW capacity and to NEEPCO, two projects totaling about 1200 MW capacity. The State of Arunachal Pradesh have also informed NHPC that the private developers have been asked to reimburse to NHPC the costs incurred in the preparation of the DPRs.

An issue has also been raised by one of the Hon. Members as to ‘why NHPC was not allowed to file suit against the two private players’. In this connection, I would like to inform that the NHPC had neither approached the Ministry nor does it require any permission from the Ministry of Power to decide on such matters which relate to its commercial interests.

I would like to inform the House that my Ministry is fully seized of the matter. It may be recalled that while answering the points raised during the half an hour discussion in the Rajya Sabha on 21/8/06, I had mentioned that ‘any loss to NHPC would be made good’ and that we will ‘find a way out and that there will be total transparency’. Appropriate steps are being taken in this direction and we are addressing the Policy issues.

In this connection, I would like to inform the House that my Ministry is committed to the expeditious development of hydro capacity in the country. India has an estimated hydro-electric potential of 1,50,000 MW of which we have so far developed only about 33,500 MW. Most of the undeveloped hydro sites are located in the Himalayas – more particularly in the North-East. These sites are in remote areas and require massive resources - both financial and managerial – for development in a time bound manner. In spite of creating a number of hydro CPSUs and also bringing NTPC into hydro development, it is evident that this task cannot be accomplished by the CPSUs alone and there is a need to involve the private sector also. A new Policy is being framed to facilitate the time-bound development of hydro potential in a transparent manner duly addressing the concerns of all the stakeholders, particularly of the Himalayan States.”

Your Visit No

Since April 20, 2000