SRINAGAR: ammu and Kashmir does have the potential to generate up to 20,000 megawatts of hydro power. But at a time when the rate of power in the market is less than that would be generated by new hydroelectric plants, it makes little sense to build new power projects, experts say.
Take for example the most recent power project inaugurated in the state: the 450 MW Baglihar II. It sells a unit of power at Rs 3.5 to the Power Development Department, although the cost of generation per unit is more than Rs 4.
That is why the Jammu and Kashmir State Power Development Corporation (JKSPDC) is having a tough time selling power from Baglihar. The highest it had been offered by an outside entity is Rs 2.5 per unit.
The Salal power project, which is largest power project in operation in the state for many years now, sells a unit of power at the cheapest Re 1 currently. In 2013, the rate per unit was Rs 1.60.
So, rather than making a power plant that will generate a unit of electricity at Rs 4, it makes sense to buy it from power projects which offer a unit at a lesser price.
Of the potential 20,000 MW, 16,475 MW has been identified by the government, including 11,283 MW in Chenab Basin, 3,084 MW in Jhelum Basin, 500 MW in Ravi Basin and 1,608 MW in Indus Basin.
At present, only 3263.46 MW (19.80 % of total potential) has been exploited— 1211.96 MW in the state sector from 21 power projects, 2009 MW from seven projects in central sector (primarily National Hydroelectric Power Corporation) and 42.5 MW in private sector from four projects.
Iftikhar Drabu, an expert on hydro power, told Kashmir Reader that the rate per unit of power has been falling in India due to availability of cheaper sources of energy like thermal power, solar and nuclear and also because hydro power plants in operation for decades offer it at cheaper rates.
Also, Drabu said, many companies have either sold their projects after completion or have been looking for buyers for under-construction projects after realising that no great profits are forthcoming.
“From the 1960s till today the hydro power contribution across India has dropped by 15 percent mainly because of risks and problems associated with the sector,” said Drabu who has been working in this sector both in India and abroad.
Some leading infrastructure players are making a beeline to the NHPC asking it to take over their hydro assets, he said.
Jindal Group has approached the NHPC to take over its three hydro projects (5,397MW). The GMR Group has also approached NHPC for sale of their hydro projects in Himachal. S Kumar Group has approached it for sale of their 400MW Maheshwar project. 1,200MW Teesta II, owned by Teesta Urja Ltd, had also been offered to NHPC. Sikkim government has offered 300MW Panan project, 120MW Rangit IV and 500MW Teesta VI to the NHPC, he added.
Drabu said Jayprakash Power Ventures, the largest experienced hydro power producer in India, has finally managed to sell two of its hydro projects (1,491MW), which had been on the block for several years. Their third 400-MW project could not be sold as it had suffered extensive damage in recent Uttaranchal floods, he said.
“The problem with hydro projects is that they take a lot of time to build and when a project is completed the cost of energy is high because the investor has to pay off loans and taxes. Though the costs vary from project to project, it can be safely said that average generation cost of a new project is Rs 5 to Rs 6 per unit,” Drabu said.
However, Himanshu Thakkar, coordinator at South Asia Network on Dams, Rivers and People, told Kashmir Reader said, “I am not sure if the potential is necessarily viable from social, environmental, hydrological or even technical and economic perspectives. So the figure (of 20,000MW) needs to go through tests in a democratic participatory way.”
“Only the projects that are found to be viable, optimum, desirable, acceptable and least cost options decided in a participatory way should go ahead,” he added.
To become self-sufficient in power needs, the only viable option appears to be generation of 10,000 MW in the next 10 years at an average of 1000 MW a year. Compared to this need, Drabu said, J&K has been able to build only 28MW per year in the past.
Now if the state were to build new power plants to generate 1000MW a year, it would require an investment of Rs 200,000 crore over 10 years, about 20,000 crore a year, which is one fourth of the 2017-18 budget of Rs 80,000 crore.
“Has the state such resources? Can the JKSPDC which took more than five years to restore a breach in Upper Sindh Project, which resulted in loss of energy to the tune of 10 times the cost of repairing the breach, do it. Can it be achieved when the removal of nuts and bolts has to wait years for cabinet approval?” he added.
Director JKSPDC Shah Faesal told Kashmir Reader he is optimistic about the state becoming self-sufficient, given “the efforts invested by the government in this sector”.
“Let’s not talk about past. We have 10,000MW of power projects that will start operations soon. I am hopeful that markets will recover,” he said.