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| | J&K: Power Projects on anvil | | Delays due to financial shortfalls | | J&K’s energy availability as per official figures from its projects set up on different river basins--Jhelum, Chenab and Indus, in addition partly Ravi flowing through Jammu worked out by the State Power Development Corporation [PDC] was over 300 MWs at the beginning of 11th five year plan. Repeated failures of the government to meet its own deadlines for commissioning of different micro and macro hydro power projects in the state sector has had the timeline reworked by the official agencies. The dismal failure in meeting targets in 11th plan makes power projects a 12th five year plan (2012-17) target. The delays are because of financial shortfalls. The state has not been allowed to develop an investment base, as what is its due from NHPC investment base has been denied to it, due to badly worked out deals of Dulhasti, Salal, Uri and Sewa-II…NHPC run power projects. True NHPC finances projects, equally true is the fact it uses state’s water, its hydro-electric source to add to its power generation capacity. In return it gives a pittance to the state out of huge profits it earns.
The fact remains that the macro projects like Kirthai-I (240 MW), Parnai (37.5 MW), New Ganderbal (93 MW), Sawalakote-I and II (1200 MW) and Baghliar-II (450 MW), the micro projects with a cumulative installed capacity of 3.61 MW’s like Pahalgam-III (1.50 MW), Machil (0.35 MW), Sanjak (1.26 MW) and Bhaderwah-III (0.50 MW) cannot be financed by states Rs 33,000 crores budget outlay, out of which about Rs 13,000 are reimbursed as salaries to government employees. State having Rs 31,000 in liabilities and Rs 19,000 in loans adds to the problem. The liabilities and loans stay in spite of natural justice demanding that Jammu and Kashmir should have had its due share of the profits from the energy sales of NHPC, given that state provides one third [1680 MW] of NHPC’s total kitty of 5295 MW. This could have provided the state with an investment base to finance and complete some, if not all power projects in hand in the 11th plan.
The delay in completing projects, according to experts, results in huge cost-escalation and even in some cases by the time the projects get completed these are already unviable economically. The micro-power projects were scheduled for commissioning by the end 2009-10.
“Projects worth 1724.71 MW capacity, excluding 450 MW Baghliar-I, were targeted for commissioning by the end of 11th five year plan period while another 1200 MWs were proposed to be added by the end of 2017-18,” says a government report prepared in 2008-09. Apart from these projects, preliminary construction work on Kiru (600 MW), Kawar (520 MW) Pakal Dul and Ratle (690 MW), after years of delay, have been taken up. While Kiru (600 MW), Kawar (520 MW) Pakal Dul are slated to come up in a joint venture between state’s Power Development Corporation [PDC] NHPC and its subsidiary Power Trading Corporation [PTC] with completion target of 2017-18, Ratle has been handed over to GVK Development Projects LTD for construction on Built, Own, Operate and Transfer (BOOT) basis, for 35 years, and is scheduled for commissioning in 2017.
Yet again NHPC holds a controlling share of 51%- 49% for self & 2% for its subsidiary Power Trading Corporation, while state floated company… Chenab Valley Power Projects Private Ltd. [CVPPL] holds minority 49% share. In all these projects, it is the NHPC which has identified the sites, prepared techno-economic feasibility reports, acquired land and entered into power sharing agreements with the State Govt. Given that NHPC has defaulted in completing and commissioning projects in time, what was the need of testing again the one trusted and found wanting? The average delay in completing projects, as per some studies is around 60 %, prime example being Dul-Hasti slated to be completed in 1994, it was commissioned in 2007. The project overrun cost which then enhances the generation cost is ultimately to be borne by our State Government and its consumers.
For Baghliar-II officials said the deadline has been reworked to 2014-15, however, given the state of state’s investment kitty it will be the Herculean task for PDC to complete it in time There is no word on commissioning Ganderbal, Parnai, Kirthai-I and II and the minor projects. Though the government added up 450 MWs of additional energy to the state pool by commissioning Baghliar-I during October 2008, officials said the project, actually conceived in 1992, was first scheduled for commissioning in the 9th five year plan, later the target was revised to 10th five year plan only to be stretched to 11th five year plan.
J&K’s peak energy demand has swelled up from 2020 MWs in 2007-08 to 2500 MWs in 2011-12 and the figures are likely to go beyond 3600 MWs by 2025, the official report reveals. On paper, it may not sound worrisome, given that state has an estimated capacity to produce 20,000, some estimates hike it to 25,000 MW, that could fetch the fetch the state a windfall of up to 70, 000 to 100,000 crore…two to three times the present budget outlay of Rs 33,000 crores. It could only be imagined, what the state could do with that amount of money! The matter boils down to that initial investment kitty, state has not been able to manage, given NHPC impediments.
State Finance Commission [SFC] has brought to fore the fact that annual average growth of energy generation has been less than one percent for the past three decades when the energy demand has grown by more than 100 percent during the corresponding period. Tracing history of the sector, the report points out that during first 5-year plan (1950-55) the expenditure on the sector was 25.69 percent of the plan size (92.47 percent of the allocation) and the development of the sector “appeared” to be a priority. However, the outlay has gone down to 15.97 percent in 2008-09 when the peak energy demands has grown up to 2120 MW’s against the local generation of 758 MW’s. The actual plan expenditure in the sector is “far less” and only in a few plans the power sector got 1/4th of the plan size (expenditure), the report mentions. About the existing power projects, the report reveals that due to lack of renovation and investment in the existing infrastructure the state owned power house are turning obsolete for want of renovation. “Some of the old power houses which have got de-rated require renovation which will result in generation of additional energy of 192 million units annually worth Rs 58 crore. The machines of the existing power houses have become obsolete and require modernization to optimize the generation,” the report stresses.
It goes on to expose that rate of growth of power generation in the state sector has been worked out to less than one percent per annum during 1980-81 to 2006-07 while the energy import has grown to 106 percent annually during the corresponding period.
“There does not seem to be any correlation between power generation and revenue realization, and power generation and plan expenditure. While former registered an annual growth of less than one percent, the latter increased by 136 percent,” the report points out. “The power generation and the investment bear no positive correlation when the sector is a critical area of the state economy.” The state, the report highlights, has no policy to maintain balance in the energy generation, supply and revenue realization. “This is causing huge strain on state economy. Lack of policy combined with negligence is pushing the power sector into disarray, despite having the potential to boost state’s resources.”
Of around 16000 MWs potential in JK [the bare minimum worked out] only 4.60 percent has been harnessed in the state sector for past six decades while as almost 10 percent has been exploited by National Hydroelectric Power Corporation in the central sector through four power projects having installed capacity of 1560 MWs. The state annually produces 758.70 MWs of energy locally from its 20 power projects out of which 252.60 MWs (33.30 percent) is the installed capacity in Kashmir, 483.80 MWs (63.77 percent) is installed capacity in Jammu region and 13.3 MWs (2.9 percent) in Ladakh. However, the report mentions that more energy is generated in Kashmir region, 852.5 million units (50.37 percent of total generation), and the energy generation is 778.67 million units (46 percent) in Jammu region and less than half percent in Ladakh.
The report has called for serious efforts on part of the government to complete execution of various projects in state sector including 1200 MW Sawalakote I&II, 450 MW Baghliar-II, 93 MW New Ganderbal, 240 MW Kirthai-I, and 1.50 MW Pahalgam-III unit, 0.35 MW Machil, 1.26-MW Sanjak and 2.50-MW Bhaderwah projects which were scheduled for completion by 2009-10. Though work on some of these projects was taken up by the government two to three decades earlier none of them have reached the completion stage despite assurances by the government almost every year.
This report is disturbing. While there is a worldwide effort in boosting the energy sector, the state remains devoid of enough funds to finance its energy needs. The state’s blame may be partial, as it has to cater to an elephantine bureaucracy which feeds on huge pays and perks devouring almost half the budget outlay [Rs13, 000 out of Rs33, 000 crores]. A leaner government might serve the state better. It might save the state enough money for widening private sector and address employment problem through private rather than the state sector.
The figures figure out some hard thinking…is the state up to it? Completion of only Sanjak—1.26 MW…11th plan target is a poor commentary on state of affairs. Baghliar-I did come-up, that was however an earlier target, subjected to re-scheduling.
Yaar Zinda, Sohbat Baqi [Reunion is subordinate to survival]
Feedback on: Iqbal.javid46@gmail.com |
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