Himachal Hydro Policy A Failure, An Environmental Disaster

For the last three years the Himachal Government has been making desperate attempts to revive the declining hydropower sector in the state. Falling revenues from the hydropower sector, the lack of interest of the private sector in taking up any new projects, the inability of existing projects to be completed on time, the rising cost of hydropower are some of the indicators that the government seriously needs to review its unrelenting and blind faith in hydropower development as the driver of the economy in the state. But instead of taking a hard and critical look at the root causes of this slow down, the government has taken steps which deserve to be challenged.

On 17th August 2016, the Himachal Government’s Power department issued a notification on amendments to the Hydropower Policy 2006 doing away with the requirement of separate NOCs from Public Works Department (PWD), Irrigation & Public Health Department (IPH), Revenue, Fisheries and Gram Panchayats. The intention is to fast track the clearance procedure with respect to hydropower projects. This is not the first time the government has made such a move. A similar notification was issued on 4th March 2014, post the setting up of a Committee on Speedy Development of Small Hydro Projects in 2013, which made a series of recommendations in order to deal with the delays in the execution of Hydropower Projects. Last year close to 15 groups and community representatives made a submission objecting to these amendments especially to the dilution of the NOC by the Gram Panchayat stating that it was in violation of the provisions of the Forest Rights Act which is yet to be implemented in the State.

Recently the Chief Minister of Himachal Pradesh also pleaded with the Union Ministry of Environment for delegation of powers to the State Government to accord environmental clearances for all run-of-the-river hydro power projects. The argument for such a plea according to Shri Vir Bhadra Singh was again delays in project implementation.

Photo Credit: Sumit Mahar (Himdhara)

What of the delays in Commissioning of under-construction projects

This is a ridiculous argument to make when the projects which have already got NOCs and are under construction are also moving at a snail’s pace. Let us look at the example of the 111 MW Sawra Kuddu Hydro-electric Project on Pabbar River which was to be commissioned by 2012, but is still nowhere close to completion. The delay has led to a cost overrun of close to Rs 606.57 crore according to the Comptroller and Auditor General of India report of 2014. This in turn will result in the per mega watt cost to double from Rs 5.03 crore to Rs 10.50 crore. Reasons for the delay and cost escalation cited by the CAG report were slow progress by contractors, inadequate provisioning of some works in the DPR, subsequent change in design and the late handing over of the sites to contractors.

The main ‘obstacles’ in project construction, often highlighted by the government and the media are court cases or protests by affected communities and environmentalists on land and environment issues. The community response has been prompted by the failure of the authorities to deal with the impacts of the hydro projects is a failure that never gets highlighted. Had the government planning, monitoring and regulatory agencies been doing their duties seriously then these issues would not crop up in the first place. Let us look at Sawra Kuddu project for example. HPPCL had to change the design of the project to include an extra adit tunnel. This was a ‘geological surprise’. The construction work for the tunnel was challenged at the Green Tribunal by an affected village because of the additional damage it caused to their water sources impacting their lives and livelihoods. Similarly in case of the 450 MW Shong Tong HEP, at the time of public hearing people and even ITBP raised the issue of ammunition depot falling in the alignment of tunnel. At that time this issue issue was ignored by all the impact assessment agencies. Once the construction work of Shong Tong HEP began, ITBP appealed to Shimla High court. This caused a delay of close to two years.

In case of the 100 MW Tidong-I project the company was dragged to court for damaging forest land with illegal muck dumping which was a major violation of the Forest Conservation Act. In case of Parbati II, there has been a delay of over one decade simply because of ‘geological surprises’ that were not anticipated. Last year, in November in the Sorang project there was a penstock burst at testing stage and just a week after in the Shongthong project a dynamyting accident which claimed lives of workers. Workers not being paid wages for months is another issue.

It is thus clear that the project commissioning delays are being caused by the failure of the regulatory agencies on one had and the the violations committed by project proponents on the other. The blind run, using short cuts, for speedy implementation and cost cutting, has infact led to further cost escalation and delays.
Incentives are not attractive either

The government apart from diluting the NOC process has also from time to time made several major policy shifts to attract the private investors and incentivise the sector. One big move has been the reduction in the upfront premium to be paid by private producers from 35 lakhs per MW to merely 1 lakh. Despite this the sector has failed to attract investors. A clear example is the 960 MW Jangi Thopan project which the government has been grappling with for the last ten years. Reliance, which was the second highest bidder after Brackel at that time had offered Rs 37 lakh per MW as an upfront premium in 2006. After the apex court ruling, the State Government in 2013 cancelled the representation of both Brakel and Reliance and decided to re-bid but was not able to get a suitor for developing this project. In 2016 the Government without any bidding process, allotted the project to the Reliance Power with reduced a upfront premium amount from of Rs. 10 lakh/MW. Despite this, Reliance Power refused to take-up the project. Now the government is considering allotting the project to NTPC at 1 lakh per MW premium. Similarly, for close to 37 HEPs the state government is not finding a single bidder. This shows that while in 2006 the companies which were competing with each other for allotment of hydro power projects, after 2012 the interest of private producers in developing hydro projects waned.

Revenue Losses

If we see the data gathered from different sources, Himachal was generating a revenue of Rs. 1300.00 crores from sale of electricity and upfront premium in the year 2007-08. This revenue has reduced to Rs 772.67 crores (around 41% de- crease) in 2011-12. Despite 36.72 % increase in total hydro power generation. This decrease in revenue mostly due to 56.74 % decline in per unit electricity rate. According to a recent statement by the Union power minister Shri Piyush Goyal India will be a surplus in electricity production by 2016, indicating that the rates of electricity are not going to increase in near future.

The government, instead of attributing losses to the real causes – its inability to study the environmental impacts of mindless construction in the fragile Himalayas, its failure to monitor the project authorities and its lack of foresight on the vagaries of the power sector itself, is using the current scenario to cut corners on people’s democratic rights and doling out public resources to corporations in the name of development.

Issued by
Himdhara Environment Research and Action Collective, Himachal Pradesh

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