CVPPL — a living example of policy paralysis and bureaucratic inertia in J&K
10 years after its inception, company is yet to produce a single unit of electricity, but its soaring administrative costs burn holes in govt pocket
Srinagar: Policy paralysis and bureaucratic inertia are what have prevented socio-economic transformation of the people of Jammu and Kashmir.
The Chenab Valley Power Projects Pvt Ltd (CVPPL) formed to utilize the former state’s hydropower potential is the classic example of this paralysis and apathy.
The power projects the company had taken up for execution some 10 years ago are virtually in deep freeze. Meanwhile, its administrative expenditure of the past two years has gone up to Rs 846 crores.
The salaries of its executives and other service costs are corporate-like but the functions are more of a feudalistic nature. The company has failed to produce a single unit of energy since its inception almost a decade back.
The company was incorporated on 13th of June 2011. Power projects including Kiru, Kawar, and Pakal Dul and Dul Hasti II with an aggregate installed capacity of 2714 MWs were taken up for execution in the first stage.
But since the memorandum of understanding was signed in 2010, the company has failed to execute any of the proposed projects. Interestingly, some of the projects it had pledged to execute had been cleared for the environmental and other clearances much ahead of the formation of the company.
Energy landscape of J&K has failed to transform the way it has developed in rest of the country or the way the erstwhile state has facilitated the harnessing of its power potential for NHPC, the Government of India hydropower giant.
Almost 30 to 40 percent of the revenues of NHPC come from its projects commissioned in Jammu and Kashmir. With free access to its land and water resources (against 12 percent free power to J&K), NHPC has additional projects under construction in the erstwhile state with an installed capacity of approximately 3000 MWs.
Unable to get finances for investment in energy sector despite an easy regulatory mechanism (as is exhibited in case of NHPC), the former state is one of the best paying clients of the Power Trading Corporation (PTC), India.
The former state’s expenditure on purchase of power and liquidation of power related liabilities stood at Rs 7961 crores on 31st of March 2019.
To take the place out of this thicket and bring an end to the exploitation of its huge water resources, a sustained civil society campaign started in the erstwhile state in the late nineties of the past century.
“The battle forced the power elite at the state and the center to take some action. An ambitious joint venture initiative was born in the form of CVPPL with shared equity between the center and the state,” said a local business leader.
CVVPL had three equity holders with NHPC and JK State Power Development Corporation each having a 49 percent share while as the PTC had two percent stakes.
A Memorandum of Understanding (MoU) was signed by the trio on December 21, 2010 and decided the projects to execute on Build, Own, Operate and Maintain (BOOM) basis.
Cumulatively, the initiative was one of the finest deals the political class of J&K had with the union government wherein it managed to exact at least 49 percent equity for its powerless people, say experts.
But failure at the state and central government levels to take policy decisions to conclusion and lack of corporate style of functioning in the CVPPL has put the initiative on the precipice, say the sources.
The company may take another decade to start its commercial operation and earning. But administrative spending on its executives, employees, and maintenance, etc., continue to soar with the passage of every year.
Employee benefit expenses of the company rose form Rs 293.43 crores on 31st of March 2018 to Rs 327.53 crores on 31st of March 2019.
Remuneration of its Managing Director inclusive of different incentives and perks during the previous financial year was Rs 61.39 lakhs.
The executives of the company incurred an expenditure of Rs 27.49 crores on security, spent Rs 3.63 crores on traveling. Rs 62.44 lakhs were spent on conveyances and Rs 54. 16 lakh on telephones, etc.