The Government of Uttarakhand has entered into agreements with L&T Uttaranchal and Tehri Hydropower Development Corporation (now, THDCIL) to make the Singoli-Bhatwari Hydroelectric Project on the Mandakini River and the Vishnugad-Pipalkoti Hydroelectric Project on the Alaknanda River. A study of these projects shows that both are in utter loss and the nation stands to lose heavily if they are not scrapped immediately.
Singoli Bhatwari Hydropower Project
The Government of Uttarakhand had made an agreement with L&T Uttaranchal on 26.11.2009 for this project. The agreement provided that the project will be commissioned on 25.11.2014. In the meanwhile, there were floods in Uttarakhand in 2013. Therefore, we may extend the date of implementation by about one year to 25.11.2015. However, the project has not commissioned even today. Thus, under the agreement, the Government of Uttarakhand (GOUK) can buy out the project and it has to pay only 75% of the realisable value of assets to L&T Uttaranchal (LTU) if it does so (Annexure 1).
Let us say the realisable value of assets of the project is 800 crores. GOUK will have to pay 75% of this amount or 600 crores to L&T Uttaranchal. It will make a profit of 200 crores.
L&T Uttaranchal has offered to sell the electricity from the project to GOUK at Rs 4.25 per unit. However, electricity is available on the India Energy Exchange at 3.85 per unit or even 3.50 per unit. If GOUK buys electricity from LTU, it will impose a burden of 161 crores on the people of Uttarakhand for additional and unwarranted payment for the purchase of expensive electricity (Annexure 2).
On the other hand, government will lose the 12% of free electricity that it will receive from this project. The value of this electricity over lifetime of the project is Rs 176.8 crores. The benefits foregone for employment in future are 21.3 crores and the benefits for infrastructures are 6.0 crores (Annexure 3). Therefore, the total benefit foregone will be 204 crores.
If GOUK buys this project today then people of Uttarakhand will make a saving of Rs 361 crores (Rs 200 crores from sale of assets and Rs 161 crore from less payment of electricity); while the loss will be Rs 204 crores. The net saving to Uttarakhand will be Rs 157 crores.
Further benefits will accrue from savings from the negative environmental impacts of this project. The Mandakini River is today pristine. It brings the spiritual charges from Kedarnath to the people of the country. These spiritual charges will be harmed by the water spring in the turbine. There will be loss of water quality, biodiversity and loss of sand to the local people. Photos of biodiversity impacted are given at Annexure 4. If we add these environmental costs than it becomes even more beneficial to buy out and close this project.
Vishnugad Pipalkoti Hydropower Project
The Project was to be completed in 2018 at a project cost of 2096 crores and produce electricity at the rate of Rs 2.26 per unit.
Three factors have changed since then.
- The design energy of the project has been reduced from 1813 million units to 1657 million units.
- Two, the Government of India has provided that environmental flows of 25 cubic meters per second (cumecs) will be released against 15 cumecs originally envisaged.
- Three, the project is to be commissioned in December 2022 at a cost of Rs 4379 crores.
The combined effect is that the electricity will now be produced at Rs 6.42 per unit. This electricity is available in the market at Rs 3.50 per unit. Therefore, the continuation of the project will impose an additional burden of Rs 2.92 per unit on the consumer of the electricity of this country. The THDCIL had made a power purchase agreement with Government of Uttar Pradesh hence this burden will fall on the consumer of Uttar Pradesh. Even if the project is commissioned in December 2022, the burden on the people will be Rs 6156 crores whereas the project can be closed at an expenditure of Rs 1800 crores incurred till 31.3.2019 (Annexure 5).
It is unlikely that electricity will be produced from the project even at cost of Rs 6.42 per unit. In June 2013 THDCIL had said that it will commission the project on 31.11.2018. In February 2019 however it has said that it will complete the project only on 31.12.2022. This means that in the 68 months from June 2013 to February 2019, the commissioning date has been delayed by 49 months from November 2018 to December 2022. If we consider that this rate of progress will continue in future then the project may be commissioned after about ten years from now and at that point of time the project cost will increase to about 8485 crores. The electricity will be produced at price of Rs 10 per unit. The burden will be about Rs 10 thousand crores whereas today it can be limited to 1800 crores (Annexure 6).
These projects were started when solar power was expensive and the price of peaking power on the India Energy Exchange was about Rs 10 per unit and the cost of electricity from these two projects was expected to be less than Rs 3 per unit. We were also not aware of the deep environmental impacts of these hydropower projects that did not involve storage. It has now come to be known that these projects harm aquatic biodiversity and water quality, lead to landslides, deprive local people of sand and the space to immerse ashes of their departed ones in the flowing river, and the loss of forests.
Times have changed. Today the price of peaking power of the India Energy Exchange is less than Rs 4; while the cost of electricity from these two projects is about Rs 6 to Rs 12 per unit. Thus these projects have not only become unviable; they have become positively harmful for the nation. Scrapping them immediately will prevent the imposition of huge financial costs on the consumers.