‘Lack of indigenous manufacturing capacity limiting hydro sector’s growth’

HK Sharma is the chairman and managing director of SJVNL, the premier hydroelectric project of the government and a joint venture between the Centre and Himachal Pradesh.

How do you see the role for your company?
In recent years, India’s energy consumption has been increasing at one of the fastest rates in the world due to economic development and population growth. India is an emerging economic power and is expected to be among the leading economies of the world by 2020. Traditionally, thermal fuel sources - coal, oil and gas - have been the highest contributors to India’s electricity supply, with a combined share of about 65% of total installed capacity. By 2030, India’s cumulative installed capacity is forecast to reach around 800,000 mw for sustenance of 9-10% of this country’s growth, but it has limited fossil fuel reserves and is dependent on imports. Only hydro power is the real alternative. With 80% of potential still lying untapped, hydro power is definitely a way forward to fulfill India’s dream of going green in electricity generation.

But then there are problems plaguing hydro power generation, right?
Despite being recognised as a relatively benign and renewable source of energy, the share of hydropower in the Indian power system has been declining steadily over the past decades.  It has dropped from about 46% in 1970 to 40% in 1980, 29% in 1990 to about 23% as on date.

It is in this backdrop that I would like to dwell on the various constraints/challenges being faced in the speedy delivery of the hydro stations with few suggestions which would help in removing the road blocks or the irritants and shall pave the way for faster implementation of hydro projects.

What would the major impediments be?
Since, water is a state subject and power being listed in the concurrent list, the state governments in the recent times has acquired a major role to play and the constraints being faced have generally become state-centric. The land acquisition, formalisation of rehabilitation and resettlement plan, comprehensive basin-wise catchment area treatment plan and accordance of various related clearances from the state governments have become quite time consuming. This becomes an impediment to the project developer. The government has tried to streamline procedures to some extent, but the multiplicity of agencies and the lack of clear guidelines have led to time and cost overruns.

What about people staying in those areas?
True, the aspiration level of the people is rising. There is a severe stress to provide the employment to the local population and states are increasingly finding it difficult to resist such aspirations. The states are now formulating   the   policies   which   would mandatorily be required by the developer to provide the necessary employment.

However, on the ground level, the skills required for the execution of hydroelectric project in the local population is generally lacking and it is increasingly becoming difficult for the developers to provide the suitable employment. Thus this has become an area of constant conflict which sometimes leads to agitation and law and order problems for hydro project developers.

Further, the hydro projects being developed presently are in very remote and difficult mountainous areas. There is lack of the basic infrastructure facilities such as road network capable of handling the movement of heavy plant and machinery, availability of uninterrupted construction power and communication facilities which is resulting into additional incurrence of cost and time in developing the basic infrastructural facilities before the construction activities of the hydro project can actually commence.

Does the domestic manufacturing capacity provide any relief?
The lack of indigenous manufacturing capacity has been limiting the sector’s growth. A number of important spare parts and special equipment, steel and alloys are still imported. More players and competition are required in the area of balance of plant and supercritical. Having more players will also ensure better quality and prices. Though new JVs have come up, it will take them a while to produce their first set of machines.

So what do you think should be done?
Most of the above concerns are being addressed through a number of legislative and policy initiatives at the central and state levels. Electricity Act 2003, 50,000 mw hydroelectric initiative, the National Electricity Policy (2005), Hydro Power Policy 2008, Tariff Policy 2006 etc are few to mention. But there are some suggestions that I would like to make which could obviate some of the constraints.

 A shelf of well investigated hydro power projects has been created through 50,000 mw Hydroelectric Initiative, launched in 2003. PFRs of all the 162 schemes have been prepared ahead of schedule.

Better coordination with the state governments is required for its implementation.

 As per Hydro Power Policy 2008 of Centre, the entire estimated hydro potential of 150,000 mw is planned to be harnessed by the end of 14th Plan i.e. by 2026-27, accordingly, there is a need to launch another such initiatives to cover the remaining projects.

 The central and state governments must ensure full implementation of the Electricity Act, Hydro Power Policy, National Electricity Policy, Tariff Policy and other important policy instruments in letter and spirit.

 River Basin development optimisation studies should be carried out by the State Government and   necessary   infrastructure   works   such   as access roads and bridges to the project site should be developed by state government in advance.

 A single-window clearance system be set in place for according the various clearances in definitive timeframe, as has been practiced by some of the state governments in case of other industries.

 R&R package should be formulated in consultation with the land oustees, gram panchayat, local administration and even local NGO’s should be frozen at the zero date of the project implementation.

 All the project affected persons ( PAPs) should have an equity stake in the project.

 Land compensation to be given partly in upfront monetary   terms   and   partly   to   be   paid   as compensation towards the deemed produce from the land in perpetuity with a suitable escalation.

 State governments should set up an empowered committee for land acquisition and work can be outsourced on contract basis.

 Comprehensive Catchment Area Treatment Plan should be formulated for the basin as a whole at the advice of specialists.

 All necessary historical data, as available with Irrigation Department (for hydrology), GSI (for geology) and Survey of India (for survey, benchmark, etc.) should be readily made available to developer for use in detailed designing.

 Creation of land bank anywhere in the country so as to afforest it in case degraded forest land for afforestation is not available in a particular hill state as is in the case of Arunachal Pradesh.

 Creation of data bank with respect to problems encountered and adopted solutions at a centralised place. The information regarding problems encountered and solutions as worked out or evolved for each of the problem at that plant during that period be provided on a standardised format. This should be compiled by a dedicated team of power producers and circulated to all the concerned.

 The exposure of Union government owned power companies to the equity capital market for the first time has shown that not only could adequate funds be generated for their expansion but also that there would be qualitative changes in the management and governance. This initiative needs to be extended to power companies controlled by the state governments.

What about neighbouring countries?
India has been cooperating with Bhutan and Nepal in hydropower development for over the decades. There are prospects of further enhancement for the benefit of all the countries and in the larger interest of energy security in the region. Bilateral cooperation in the power sector could create a win-win situation for the countries in this region. Further, country-to-country transmission links would lead to optimal use of energy.

Any last thoughts?
Yes. I  strongly  advocate creation    of    basin-wise River Development Authorities armed with legal teeth with adequate representation from the state governments which would  ensure  speedy resolution  of state-centric issues and would play a very vital role in efficient operation of all the hydro projects after commissioning in the particular river basin.