J&K Govt gifting Ratle power project to Centre
GVK dumped, JKSPDCL sidelined; experts smell rat in whole procedure
Srinagar November 09: After failing to facilitate execution of 850 MW Ratle Hydro Electric Project through a private company the state government has “gifted” the project to the union government by keeping aside its own J&K State Power Development Corporation (JKSPDC).
The state government had diligently blasted trumpets after signing an agreement with GVK Power and Infrastructure Limited, a Hyderabad-based company in 2010 for construction of the 850 MW hydel power project at an estimated cost of rupees 6400 crores.
Ratle was the first hydropower project in strife torn region of Jammu and Kashmir awarded on a tariff-based international competitive bidding procedure.
According to the terms of the contract the power project had to be built, operated and transferred by GVK to the power famished state of J&K after 35 years.
As per the power purchase agreement of the state with company, Jammu and Kashmir was to get 16 percent free power from the Project apart from the first right of purchase for 55% of the power generated by the plant at a near to the ground rate of Rs 1.44 per unit.
The agreement would have led to an era, free of the whole-sale exploitation of water resources of Jammu & Kashmir by government of India’s hydel power giant, NHPC, say experts.
NHPC is currently running eight hydro power projects in J&K, generating 2339 MWs which is transmitted to India’s industrial, commercial and domestic sectors.
An economically sustainable project Ratle would have gone a long way in mitigating the energy deficiency of the state after its scheduled completion in 2017, say experts.
However, failure of the government in providing enabling environment to the GVK, forced the company to abandon the project midway, say the sources.
Although militants and separatist forces are alleged to have created unstable conditions for private investment in the state, interestingly in case of the Ratle Power Project Bharatiya Jananta Party (BJP) is alleged to have played a spoilsport.
“The local BJP leaders in effect started “extortion” of the Company by forcing it to employ its activists”, said Shakil Qalander, an industry lobbyist.
“Their unrelenting goondaism drastically affected the work of the company and the government played an inert onlooker”, he added.
- Ratle was the first hydropower project in J&K awarded on a tariff-based international competitive bidding procedure.
- According to the terms of the contract the power project had to be built, operated and transferred by GVK to the power famished state of J&K after 35 years.
- J&K was to get 16 percent free power from the Project apart from the first right of purchase for 55% of the power generated by the plant at a near to the ground rate of Rs 1.44 per unit.
A government official told this newspaper that some other issues including water usage charges and tariff arguments also propped up between the state government and GVK.
The issues could have been sorted out but an indifferent bureaucracy slept over the matter and instead the government issued a notice in February 2017 terminating the contract to the company, the official said.
Subsequently reports came that the abandoned 850 MW Ratle Power Project will be handed over to the J&K owned Power Development Corporation.
Owing to J&K’s huge hydroelectric power potential of 20000 MWs, the state government in order to harness this potential in a sustained manner, established Jammu & Kashmir State Power Development Corporation Limited (JKSPDCL) and incorporated it as Private limited company in 1995.
The Company currently owns 23 small and medium sized hydel power projects in the state. It has the reputation for executing, running and maintaining successfully the 900 MW Baglihar-I and II.
With the establishment of JKSPDCL, the state now had the option to raise funds from power sector lenders across India including the banking consortia.
However, which forces scuttled the move and kept aside the JKSPDCL, is a mystery worth unraveling, said a former engineer with the Company.
Sources disclosed that in wake of governor’s rule, the State Administrative Council (SAC) has approved a plan for a joint venture for Ratle between the central government and the state.
SAC claims the Project shall be transferred to the state within a period of seven years from the start of its commercial operation.
To justify the “sabotage” to JKSPDCL and GVK, the SAC in a recent statement said “the hydro power projects, with long gestation periods, coupled with relief and rehabilitation issues and higher initial capital investment, have not remained attractive investment portfolios for private investors”.
Political economists have, however, a take.
“The most important point in case of power generation in conflict situations is not about generation itself but control over the resources on a long term basis. Competitive markets in this line of production will go a long way in erecting an institutional mechanism for the same”, said Dr Javed Iqbal, an assistant professor of economics at University of Kashmir.
“Yet, control at the resources is at the center stage of power relations between the J&K and union of India. So it is not difficult to comprehend why at all institutional mechanisms that would deliver efficiently will not be allowed to grow”, he added.
Economic growth and sustainability in the power sector for a resource rich state like J&K is not having a breakthrough because of this unstated policy of the central government, say economists.
Rashid Paul is Associate Editor at Kashmir Images.
He can be reached at firstname.lastname@example.org