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Transcript of Hydro Power Devt India
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Hydropower
Developmentin IndiaA Sector Assessment
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Hydropower Development n Inda: A Sector Assessmentv
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A Sector Assessment
K. Ramanathan
P. Abeygunawardena
Hydropower
Developmentin India
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Hydropower Development in India: A Sector Assessmentii
2007 Asian Development Bank
All rights reserved. Published 2007.
Printed in the Philippines.
Cataloging-In-Publication Data
Publication Stock No. 031607
Asian Development Bank.
Reference document on hydropower development in India
1. India 2. Hydropower development
The views expressed in this book are those of the authors and do not necessarily reflect the views
and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments
they represent.
ADB does not guarantee the accuracy of the data included in this publication and accepts no re-
sponsibility for any consequence of their use.
Use of the term country does not imply any judgment by the authors or ADB as to the legal or
other status of any territorial entity.
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Contents
Acronyms and Abbrevatons v
Preface v
Executve Summary x
I Introducton 1
II Overvew of Indan Power Sector 3
III Plans for Future Power Development 5
IV Hydropower Development n Inda 8
V Strateges for Accelerated Hydropower Development 12
VI Prvate Sector Partcpaton 17
VII The Small Hydro Segment 20
VIII Energy Securty Issues and Regonal Cooperaton n Hydropower Development 24
IX Conclusons 27
Appendxes 29
A Breakdown of Installed Generaton Capacty n Utltes 29
B Lst of Low Tarff Schemes under 50,000 MW Hydroelectrc Intatves 30
C Requrements for Obtanng Clearances and Approvals 32
D Regulatory and Tarff-related Issues n Hydropower Generaton 40
E Draft Gudelnes for Allocaton of Hydrostes to Prvate Developers 43
F Hydropower Development n Uttaranchal 49
G Hydropower Development n Hmachal Pradesh 55
H Hydropower Development n Skkm 61
I Hydropower Development n North-Eastern Regon 65
References 70
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Hydropower Development n Inda: A Sector Assessmentv
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v
Acronyms and Abbreviations
CAMPA Compensatory Afforestaton Fund Management and Plannng Authorty
CAT catchment area treatment
CCEA Cabnet Commttee on Economc Affars
CEA Central Electrcty Authorty
CERC Central Electrcty Regulatory Commsson
CPIB Commttee of Publc Investment Board
CPSU central power sector unt
CNG compressed natural gas
CWC Central Water Commsson
DPR detaled project report
EA Electrcty Act 2003
EIA envronmental mpact assessment
EMP envronmental management plan
EPS Electrc Power Survey
FI fnancal nsttuton
GDP gross domestc product
HP Hmachal Pradesh
HPERC Hmachal Pradesh Electrcty Regulatory Commsson
HPSEB Hmachal Pradesh State Electrcty BoardIPP ndependent power producer
JPVL Japrakash Power Venture Lmted
LADA local area development authorty
LNG lquefed natural gas
MNES Mnstry of Non-Conventonal Energy Resources
MOEF Mnstry of Envronment and Forests
MOF Mnstry of Fnance
MOP Mnstry of Power
MORD Mnstry of Rural Development
MOU memorandum of understandng
NEA Nepal Electrcty Authorty
NEEPCO North-Eastern Electrc Power CorporatonNHDC Narmada Hydro Development Corporaton
NHPC Natonal Hydroelectrc Power Corporaton
NTPC Natonal Thermal Power Corporaton
NPV net present value
NPRR 2003 Natonal Polcy on Resettlement and Rehabltaton, 2003
NEP Natonal Electrcty Plan 2005
NER North-Easthern Regon
PAF Project-affected famly
PFC Power Fnance Corporaton
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Hydropower Development n Inda: A Sector Assessmentv
PIB Publc Investment Board
PFR prefeasblty report
PGCIL Power Grd Corporaton of Inda Lmted
RFP request for proposal
R&R resettlement and rehabltaton
SEB state electrcty board
SHP small hydro project
SEIAA state/unon terrtory envronmental mpact assessment authorty
SEAC state/unon terrtory level expert apprasal commttee
SERC state electrcty regulatory commsson
SJVNL Satluj Jal Vdyut Ngam Lmted
SPCB state polluton control board
SPDCL Skkm Power Development Corporaton Lmted
THDC Tehr Hydro Development Corporaton
TEC techno-economc clearance
THPA Tala Hydro-electrc Project Authorty
TOR terms of referenceUERC Uttaranchal Electrcty Regulatory Commsson
UPCL Uttaranchal Power Corporaton Ltd.
UTPCC Unon Terrtory Polluton Control Board
WEIGHTS and MEASURES
BU (bllon unt) Unt of energy, equal to 1x109
kWh (klowatt-hour) Unt of energy, equal to 1 unt
MW (megawatt) Unt of power, equal to 1x106
GW (ggawatt) Unt of power, equal to 1 bllon (109) watts
MT (metrc ton) Unt of weght, equal to 1,000 kg or 2,204.6 pounds
CONVERSION
Rs1 mllon Equal to Rs1x106
Rs1 bllon Equal to Rs1x109
Rs1 lakh Equal to Rs1x105
Rs1 crore Equal to Rs1x107
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v
Preface
Ths report s ntended to be a reference document for varous partes nvolved n hydropower de-
velopment n Inda. It provdes an assessment of the hydropower development potental n Inda.
Although the report s somewhat techncal n nature, t should be of nterest to the Government,
nongovernment organzatons, and cvl socety n general. The report would serve ts purpose ft helps to renforce publc awareness and concern to make the Indan energy sector more dverse
and sustanable.
Energy securty s a major concern n many of our developng member countres. Inda
s no dfferent to ths. In order to mantan the requred power demand-supply balance and to
meet ts goal of Power For All by 2012, Inda needs to nstall an addtonal 100,000MW power
generatng capacty. Ths s a major challenge and we hope Indas vast hydropower potental can
contrbute to ths n an envronmentally sustanable and socally responsble manner. In ths report,
an assessment has been made to understand the hydropower potental. A sgnfcant contrbuton
from hydropower resources to meet the emergng needs of the power sector seems techncally
feasble and cost-effectve.
The Energy Dvson of South Asa Regonal Department prepared ths report n collaboraton
wth the Energy and Resources Insttute, New Delh, Inda. I wsh to convey my sncere apprecatonto the authors for brngng out ths report at ths juncture.
Kuno Senga
Drector General
South Asa Regonal Department
Asan Development Bank
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Hydropower Development n Inda: A Sector Assessmentv
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x
Executive Summary
A fast growng power sector s crucal to sustan Indas economc growth. Inda has an assessed
hydropower potental to the tune of 84,000 MW at 60% load factor; out of ths only about 20%
has been developed so far. In the past varous factors such as the dearth of adequately nvest-
gated projects, envronmental concerns, resettlement and rehabltaton ssues, land acqustonproblems, regulatory ssues, long clearance and approval procedures, power evacuaton problems,
the dearth of good contractors, and n some cases, nter-state ssues and law and order problems
have contrbuted to the slow pace of hydropower development. There have been large tme and
cost overruns n case of some projects due to geologcal surprses, resettlement and rehabltaton
ssues, etc. However, consderng the large potental and the ntrnsc characterstcs of hydropower
n promotng the countrys energy securty and flexblty n system operaton, the Government s
keen to accelerate hydropower development.
Most of the above concerns are beng addressed through a number of legslatve and
polcy ntatves at the central and state levels. As dscussed n detal n the report, these nclude
preparaton of a shelf of well-nvestgated projects and streamlnng of statutory clearances and
approvals, establshment of ndependent regulatory commssons, provson for long-term fnancng
for projects, ncreased flexblty n sale of power, etc. In May 2003, the Prme Mnster of Indalaunched a 50,000 megawatt (MW) hydro ntatve. Under ths scheme, detaled project reports
(DPRs) are beng prepared for 73 schemes, whch have an ndcatve frst year tarff below Rs2.50.
Ths would provde a shelf of farly well nvestgated low tarff projects to prospectve developers.
Rsk perceptons n takng up the projects and the possbltes of tme and cost overruns are also
expected to get mnmzed. Of these schemes (total about 32,000 MW), 70 are located n the
Brahmaputra, Indus and Ganga basns n the north and north-eastern part of the country.
The Government has formulated a number of measures to address the ssues related to
watershed management of upstream and downstream. For example, n case of mult-purpose
schemes, Electrcty Act 2003 requres that the state government and the generatng company
coordnate ther actvtes wth those other persons responsble for such scheme nsofar as they are
nter-related. Smlarly, the techno-economc clearance and the Central Electrc Authorty would
look nto the optmal development of the rver or ts trbutares consstent wth other requrements.
The Mnstry of Envronment and Forestry clearance would look nto the envronmental mpacts
and socal/communty development aspects assocated wth the projects and the developers would
be requred to depost adequate funds for compensatory afforestaton, catchment area treatment
plan, wldlfe management plans, bodversty conservaton plans, etc.
Prvate sector partcpaton has been low n the hydropower sector although the sector was
opened up n 1991 snce the nvestors looked at t as a hgher rsk proposton compared to thermal
projects. The Government has ntated a number of polcy measures to address such concerns. They
nclude avalablty of farly well nvestgated DPRs, formulaton of transparent bddng procedures,
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Hydropower Development n Inda: A Sector Assessmentx
provson of open access and tradng, notfcaton of tarff determnaton processes, jont venture
ntatves, etc. The small hydro segment also offers consderable scope for development both for grd
and off-grd applcatons. About 80% of the estmated potental remans untapped. The Mnstry
of Non-conventonal Energy Sources s presently provdng support to the states for assessment of
potental, preparaton of DPRs and project mplementaton.
Inda needs to moblze large fnances for mplementaton of ts power program. Whle the
Government has substantally stepped up ts budgetary allocatons to the hydro sector, support
from nternatonal agences and the prvate sector s also needed. In case of such projects, the
developers however seem to have a percepton that the apprasal processes are often long and ths
n turn could cause delays n takng up the project for mplementaton and consequental tme and
cost overruns. Hence they hold the vew that n case of projects that are n a farly mature state for
takng up for mplementaton, t may be prudent to borrow from the market (especally when such
fundng can be accessed). Nevertheless, the developers consder that workng wth nternatonal
donor agences would provde some rch experence and also mprove ther credt ratng wth other
fnancers.
Inda has been cooperatng wth Bhutan and Nepal n hydropower development for over a
decade. There are prospects of further enhancement for the beneft of all the countres and n thelarger nterest of energy securty n the regon. Some prospects of hydropower cooperaton wth
other neghborng countres are also ndcated.
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1
Introduction
S
purred by sustaned economc growth, rse n ncome levels, and ncreased avalablty of
goods and servces, Indas ncremental energy demand for the next decade s projected
to be among the hghest n the world. Ths ncreasng energy demand also translates nto
hgher demand for electrcty. It has been estmated that n order to support a growth rateof the gross domestc product (GDP) of around 7% per annum, the rate of growth of power supply
needs to be over 10% annually. Ths calls for rapd development of the countrys power sector, tak-
ng nto account, nter ala, consderatons of long-term sustanablty, envronmental aspects and
socal concerns.
Inda s endowed wth rch hydropower potental; t ranks ffth n the world n terms of
usable potental. However, less than 25% has been developed or taken up for development. Thus
hydropower s one of the potental sources for meetng the growng energy needs of the country. A
judcal mx of hydropower n the energy portfolo can also contrbute to energy securty, reducton
of greenhouse gas emssons, meetng the peak demand and also ncreased flexblty n grd
operaton. Besdes, projects may also be conceved as mult-purpose ones contrbutng not only to
power but also to rrgaton, flood control, navgaton, etc. The Government of Inda s, therefore,
gvng specal emphass to accelerated hydropower development n ts power development plans.Moblzaton of adequate fnancal resources s an mportant requrement n ths context.
The Government has, therefore, been seekng support from nternatonal donor agences and
the prvate sector to supplement ts own resources. Ths report has been prepared to facltate
such fundng. It s not ntended to be a crtque of the development ntatves and polces of the
Government. The objectve s to provde a comprehensve assessment of what s happenng n the
hydropower sector n Inda that would be useful whle apprasng future fundng optons by donor
agences. Ths has been prepared based on detaled lterature survey and personal dscussons
wth senor offcers of the Mnstry of Power (MOP), Central Electrcty Authorty (CEA), Mnstry
of Envronment and Forests (MOEF), and a number of publc and prvate sector developers and
consultancy organzatons. The report also annexes an overvew of hydropower development
prospects n the states of Uttarakhand (formerly Uttaranchal), Hmachal Pradesh, Skkm and n
the North-Eastern Regon (NER), where large untapped potental exsts.
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Hydropower Development n Inda: A Sector Assessment2
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3
Overview of Indian Power Sector
T
he nstalled generatng capacty n Inda (n utltes) as of 31 March 2006 was nearly
125,000 megawatts (MW). Ths ncluded thermal (coal, gas and lqud fuel), hydro, nu-
clear, and renewable based generaton. Hydropower consttuted about 32,325 MW. Adetaled energy breakdown of the nstalled capacty n utltes n the fve power regons of
the country on a sector-wse and mode-wse bass s gven n Appendx 1. As may be seen there the
hydro-thermal mx s low wth hydropower consttutng about 26% of the total capacty.1 Nearly
90% of the nstalled capacty s n the publc sector. In the case of hydropower, the publc sector
has a predomnant share of over 97%. Nearly 78% s n the state sector. The annual gross electrcty
generaton was about 617 bllon unts (BU) durng 2005--2006; the share of hydropower n ths
was around 16%.
The energy resources of the country are unevenly dstrbuted wth bulk of the hydro resources
n the northern and north-eastern part, and fossl fuel resources n the central and western parts.
In order to ensure optmal utlzaton of these resources, the power systems of the country were
demarcated nto fve power regons and a regonal concept for power plannng was ntroduced n the
1960s. Ths led to development of regonal power grds and nter-regonal nterconnectons. In the1980s the concept of a natonal grd was adopted and ths led to further strengthenng of the ntra-
regonal and nter-regonal transmsson systems. As a result an extensve network of transmsson and
dstrbuton lnes (over 6 mllon crcut klometers) s presently n operaton and a Natonal Power Grd
s n the process of evoluton. The Indan power system s also nterconnected wth the power systems
of Bhutan and Nepal, facltatng transnatonal power exchanges as per blateral agreements.
The demand for power has been growng at the rate of 5.74% n recent years.2 Durng 2005-
2006 the demand was 632 BU n terms of energy and 93.21 ggawatts (GW) n terms of peak power
requrements. The avalablty of power had been contnually fallng short of the demand and, as a
result, the country s experencng power shortages of varyng degrees n dfferent parts of the country3.
The shortages durng 2005-2006 were 8.4% n energy and 12.3% n peakng power. Per-capta
consumpton of electrcty s relatvely low, of the order of 600 klowatt-hours (kWh). Presently, over
84% of the vllages are electrfed; but only 43.5% of the rural households have access to electrcty.
1A hydro-thermal mx of 60:40 s often consdered deal; but t s not sacrosanct. Nevertheless, a hgher component ofhydropower s preferred from the system operaton pont of vew.
2 TERIEnergyDataDirectoryandYearbook,200405
3Ths may be attrbuted to a host of factors lke shortfalls n targeted capacty addton (only 47.5% of the planned
additionscouldbeachievedduringtheNinthFive-YearPlan19972002),inefficienciesinproductionandusageof
power, prcng dstortons, etc..
The authors wsh to acknowledge the support receved from Mr. Mansh Shrvastava, Ms. Namrata Mukherjee and Ms. NehaMsra of TERI n lterature survey and complaton of data.
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Hydropower Development n Inda: A Sector Assessment4
The techncal and commercal performance of the power utltes s a matter of grave concern.
Whle some mprovements have been notced n recent years, there s consderable scope for
mprovement. The thermal plant effcences are of the order of 31.5% and the system losses are
around 32.5%.4 The Government s conscous of the stuaton and has n recent years taken a number
of polcy ntatves and reform measures amed at mprovng the health of the sector. As part of the
reform program, the sector was opened up for prvate sector partcpaton n generaton n 1991.
Durng the md-1990s a more broadbased reform leadng to changes n the structure, ownershp
patterns and regulatory set up was ntated. The Electrcty Act,EA 2003 provdes an approprate legal
and regulatory framework for ths. The reform measures especally focus on creatng an nvestment-
frendly envronment for prvate sector partcpaton, promoton of competton and protecton
of consumer nterests. Some of the key features of the EA are n Box 1. Independent regulatory
commssons have been establshed n most of the States. In case of Mzoram and Manpur, a Jont
Electrcty Commsson (JERC) has been notfed. An Appellate Trbunal has also been consttuted whch
would hear appeals aganst orders of regulatory commssons. Under the provsons of EA 2003, a
Natonal Electrcty Polcy and Tarff Polcy have been notfed. A draft Natonal Electrcty Plan (NEP) was
notfed n 2005; ths s now beng fnalzed based on the revsed nformaton ongeneratng capacty
addton targets. Smlarly, almost all the regulatory commssons have gven tarff orders and a numberof them have notfed open access regulatons. There s also an added focus on renewable energy.
There s consderable scope for mprovement of effcences n the end use sector. Realzng ths,
the Government had legslated an Energy Conservaton Act, whch came nto effect n March 2002.
Ths Act lad down a number of measures to ensure effcent use of energy and ts conservaton lke
establshment of a Bureau of Energy Effcency (BEE), powers to the Central and state governments
to facltate and enforce effcent use of energy and ts conservaton, provson for standards and
labelng of energy-ntensve equpment and applances, mandatory energy audts, etc.
432.5% system losses translate nto 174 BU; approxmately 24 GW at 60% load factor.
Box 1. Key Features of Electricity Act 2003
The Central Government to prepare a Natonal Electrcty Polcy n consultaton wth state
governments. Central Electrcty Authorty to prepare a Natonal Electrcty Plan. Thrust to complete rural electrfcaton; provson for lcense free generaton and dstrbuton n
rural areas.
De-lcensng of generaton (except hydropower projects beyond a certan captal cost and nuclear)and freeng of captve generaton.
Provsons for promotng renewable energy based generaton. Provsons for prvate lcensees n transmsson and entry n dstrbuton through an ndependent
network
Open access n transmsson from the outset; to be ntroduced n phases n dstrbuton. Establshment of state electrcty regulatory commssons made mandatory. Provsons for payment of subsdy through budget. Tradng recognzed as a dstnct actvty lcensed by the approprate regulatory commsson.
Provsons for reorganzaton of state electrcty boards. Meterng of all electrcty suppled made mandatory. An Appellate Trbunal to hear appeals aganst decsons of the state electrcty regulatory
commssons.
Provsons relatng to theft of electrcty made more strngent. Provsons for safeguardng consumer nterest. Ombudsman scheme for redressal consumer
grevance.
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5
I
nda s pursung a centralzed system for power plannng. EA 2003 requres CEA to prepare a
NEP n accordance wth the Natonal Electrcty Polcy notfed by the Government and update
t once every 5 years. The plan s to be fnalzed takng nto account suggestons and objec-
tons from lcensees, generatng companes and the publc. The plan s to be notfed onlyafter gettng the approval of the Government. CEA has also to formulate a perspectve trans-
msson plan for nter-state and ntra-state transmsson systems. These plans would be contnuously
updated to take care of the revsons n load projectons and generaton scenaros. Further detaled
plannng by the Central and state transmsson utltes has to conform to ths plan.
A draft NEP was notfed n 2005 whch was based on an all-Inda generaton capacty
additionofaround40,000MWduring20022007andthedemandprojectionsshowninTable1.
Table 1: Long-Term Forecasts of Electricity: All India (Public Utilities)
Energy Requirement (MW) Peak Load (MW)
Region 2011-2012 2016-2017 2011-2012 2016-2017
Northern Regon 308,528 429,480 49,674 69,178Western Regon 299,075 395,859 46,825 61,966Southern Regon 262,718 354,599 42,061 56,883Eastern Regon 90,396 117,248 15,664 20,416North-Eastern Regon 14,061 20,756 2,789 4,134A&N Islands 374 591 77 122Lakshadweep 44 111 17 26
All India 975,222 1,318,644 157,107 212,725
Source: 16th Electrc Power Survey, report released January 2001.
The plan covered two scenaros of GDP growth rate; namely, 6.5% and 7.4% for workng out
generaton capacty addtons. Besdes the lkely mpact of varous factors such as lmted ndgenous
coal avalablty367 metrc tons (MT) as compared to 419 MT n the base caseenergy conservaton
(about 6.9%), peak reducton (5%), nter-regonal dversty n demand (3.5%), accelerated rural
electrfcaton, and household modernzaton, spnnng reserve requrement (5%), etc. and low
hydro scenaro (benefts of 5,000 MW of hydropower slppng from the 11th Plan to the 12th Plan)
have also been studed. A summary of the results s shown n Table 2.
Plans for Future Power Development
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Hydropower Development n Inda: A Sector Assessment6
Scenario Peak Demand Installed Capacity AdditionCapacity 11th Plan
Scenario I
Base case 157,107 204,234 60,896Lmted coal (Indgenous) 157,107 203,668 60,330Energy conservaton 146,243 190,343 47,005Demand management 149,252 194,455 51,117Dversty 150,721 196,575 53,237Rural electrfcaton 167,507 216,598 73,260Low hydro development 157,107 204,386 61,048Household modernzaton 163,723 212,523 69,185Spnnng reserve (5%) 157,107 212,056 68,718Desrable plan* 155,520 202,453 59,115Scenario IIHgh GDP growth 181,941 235,168 91,830Desrable plan (Hgh GDPgrowth) 174,100 223,648 80,310
* Consders effect of ncreased demand on account of accelerated rural electrfcaton program and householdmodernzaton along wth demand reductons due to nter-regonal dversty and energy conservaton/effcencymprovement.
Source: Draft Natonal Electrcty Plan, 2005.
Table 2: Generation Capacity Requirement in 11th Plan
The base case studes ndcated that relablty ndces n terms of Loss of Load Probablty
(LOLP) would be 1.07% by end of the 11th Plan and 0.94% by end of the 12th Plan. The Energy Not
Served ndex worked out to 0.0342% and 0.0294%, respectvely, durng ths perod. The hydropower
capacty addton targets as per ths plan are 22,420 MW durng the 11th Plan and 34,500 MW
durng the 12th Plan. The draft NEP s beng revsed takng nto account the latest projectons of
capacty addtons durng 2002-2007.5 Dscussons wth CEA also ndcate that, based on current
status, the feasble addton n hydropower capacty may be only 17,000 MW n the 11th Plan and
20,000 MW n the 12th Plan.
As regards the fuel mx, coal s lkely to be the manstay n the near future wth focus on
clean coal technologes. However, Indas coal reserves are lmted. Further, nvestments n the coal
sector have to rely on government budgetng. In the past the Government has not made adequate
budgetary allocatons for development of coal mnes, and as a result demand has outstrpped
supply.6 There are also problems of hgh ash content, processng and washng of coal, regulatory
ssues regardng transportaton of coal and envronmental ssues, etc. As regards the opton of
natural gas, the supples are very lmted and there s a concern of prce volatlty. In case of lquefed
natural gas (LNG), t has to be totally mported and the prce beng lnked to the global prce of crude
ol, there wll be a huge prce rsk n mportng LNG. There s a renewed focus on nuclear power;
however, very large capacty addtons are not lkely n the near future.7 Also there are concerns of
avalablty of uranum and costs related to ts mnng. In recent years the Government has been
gvng specal emphass to promoton of renewable sources of energy, but the contrbuton fromthese would be lmted consderng the large power requrements of the country.
5The revsed verson of the document s stll not n the publc doman.
6Currently, the Government s plannng to mport about 40 mllon tons of coal.
7As per Government targets the nuclear capacty s lkely to be 20,000 MW by 2020.
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77Plans for Future Power Development
Under these crcumstances power planners are gvng specal attenton to accelerated
development of hydropower as an mportant energy resource for ensurng the countrys energy
securty. As s well known, hydropower has several advantages over other forms of energy sources.
It s totally renewable and non-pollutng and can also provde a more stable prceregme over a long perod of tme.
It has nherent capablty for quck startng, stoppng, load varatons, etc. and sthus deally suted for meetng the peakng demand.
Generaton cost s not only nflaton free but t also reduces wth tme. Development of hydropower projects s also n many cases assocated wth
rrgaton, drnkng water, flood control, navgaton and toursm benefts.
Pumped storage plants can effectvely regulate the energy avalablty durng theday by pumpng up water nto the reservor durng off-peak hours when there
s surplus energy n the grd and generatng power from ths stored water when
needed durng peak hours. They can also quckly reverse ther mode of operaton
from pumpng to generatng and vce versa. Thus pumped storage plants can playan mportant role n meetng the peak demand and also n mprovng the grd
stablty and load factor of thermal power statons.
Small hydro plants have least envronmental mpacts and would be deally sutedfor rural electrfcaton partcularly n remote areas. Ths assumes specal mportance
n the context of achevng the target of 100% vllage electrfcaton by 2007 and
power for all by 2012.
Recently the Energy Coordnaton Commttee (ECC), headed by the Prme Mnster of Inda,
approved establshment of fve ultra-mega projects each of 4,000 MW capacty.8 The ECC has also
decded to set up a panel under the cabnet secretary to look nto ssues concernng hydropower
plants for expedtng approvals.
Specal emphass s also beng gven to plan and mplement a transmsson system matchng
wth the addtons to the generaton capacty. In case of hydropower projects ths assumes added
mportance n vew of the fact that these are generally located far away from the load centers
and the terran often presents serous rght-of-way problems. Ths calls for poolng of power from
dfferent projects, development of hgh capacty transmsson corrdors, staged development of
the transmsson system, use of new technologes, etc. The CEA s lookng nto these aspects whle
developng perspectve transmsson plans.9 Ths has specal relevance n case of hydropower
development n Hmachal Pradesh (HP), Skkm, Uttaranchal and NER, where the local demands are
low compared to the avalable power potental. The ground rules for connecton of the generators
to the transmsson system and for plannng and operaton of the nterconnected power systems
8These would be coal-based ndependent power producers, located at pt heads and on the coast. Tentatve allocaton ofpower from four of these projects has already been done. MOP has also n the meantme frmed up the paymentsecurty mechansm for the projects (whch, t s proposed, wll consst of an rrevocable letter of credt and rrevocablearrangement of escrow account havng clams on recevables). In the event of a default, the developers wll have therght to sell power to any other dstrbuton companes or hgh-tenson consumers.
9A draft perspectve transmsson plan was notfed n July 2005.
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Hydropower Development n Inda: A Sector Assessment8
Hydropower Development
in India
Resource Potential
Inda s endowed wth rch hydropower potental; t ranks ffth n the world n terms of usable
potental. Ths s dstrbuted across sx major rver systems (49 basns), namely, the Indus,
Brahmaputra, Ganga, the central Indan rver systems, and the east and west flowng rver
systems of south Inda. The Indus, Brahmaputra and Ganga together account for nearly 80%
of the total potental. In the case of Indus the utlzaton s, however, governed by the Indus Wa-
ter Treaty wth Pakstan. The economcally explotable potental from these rver systems through
medum and major schemes has been assessed at 84,044 MW at 60% load factor10 correspondng
to an nstalled capacty of around 150,000 MW. As mentoned earler, so far only 32,325 MW has
been establshed. Tables 3 and 4 show the status of development of hydropower on a regon-wse
and basn-wse bass. In addton, pumped storage stes wth an aggregate capacty to the tune of
94,000 MW have also been dentfed, but only about 5,000 MW have so far been developed. Theassessment of small hydro (up to 25 MW) potental has ndcated nearly 10,000 MW dstrbuted over
4,000 stes. It s estmated there s stll an undentfed small hydro potental of almost 5,000 MW.
10 Thisisbasedonthe reassessment(thefirstassessmentwascarriedoutduring19531959)ofhydropowerresources
carred out by CEA n 1980s takng nto account new nformaton avalable on topographcal features and hydrology ofthe rver systems, technologcal advances and experence ganed n cvl works of hydropower projects, and the latesttrends n relatve economcs of power generaton from dfferent sources. The assessment of energy s based on avalabltyof water correspondng to a 90% dependable year and the stng of power statons based on topographcal studes.
Region Potential Potential Potential under Balance BalanceAssessed Developed Development Potential Potential
(MW) (MW) (MW) (MW) (%)
Northern 30,155 5,150 2,905 22,100 73.28Western 5,679 2,270 1,164 22,450 39.53Southern 10,763 5,924 153 4,686 43.54
Eastern 5,590 1,364 201 4,025 72.00North-Eastern 31,857 517 914 30,424 95.5Total 84,044 15,225 5,339 69,480 75.53
Source: Indan Natonal HydroPower Assocaton. 2005.
Table 3: Region-Wise Potential and its Status of Development at
60% Load Factor as on 1 January 2005
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99Hydropower Development n Inda
Basin Potential Potential Potential under Balance Balance(MW) Developed Development Potential Potential
(MW) (MW) (MW) (%)Indus Basn 19,988 3,731 1,156 14,701 73.55Ganga Basn 10,715 1,901 1,367 7,447 69.5Central Indan Rvers 2,740 1,060 1,147 533 19.45West Flowng Rvers 6,149 3,704 41 2,404 39.09East Flowng Rvers 9,532 4,168 144 5,220 54.76Brahmaputra Basn 34,920 661 1,085 33,175 95Total 84,044 15,225 5,339 63,480 75.53
Source: Indan Natonal HydroPower Assocaton.
Table 4: Basin-Wise Potential and its Status of Development at
60% Load Factor as of 1 January 2005
Hydropower development commenced over a century ago n Inda wth the nstallaton of a
130 kW power staton n the Darjeelng dstrct of West Bengal, almost n pace wth the worlds frst
hydro-electrc staton n the Unted States. However, to date only about 20% of the countrys vasthydro potental has been harnessed. The share of hydropower n the total nstalled capacty has also
decreased over the years; from over 50% n 1960-61 to nearly 26% now (Fg 1).
Fig. 1 Growth of Installed hydropower capacity
0
20000
40000
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120000
140000
31.12.50
31.03.56
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80
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90
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92
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97
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Year
InstalledCapacity(MW)
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Total installed capacity Hydro capacity Share of hydro (%)
Barriers in Development
The man barrers/concerns that have come n the way of development of hydropower projects are
brefly dscussed below.
Longer gestation period and capital intensive nature of the projects: Preparaton of
detaled projects reports (DPRs) for hydropower projects takes relatvely longer perod than for
thermal projects because relable hydrologcal, geologcal, sesmologcal and envronmental
studes have to be carred out for a longer perod. Thus hydropower projects generally ental a
long gestaton perod. In addton to ths, these projects are comparatvely captal ntensve. In
the context of resource shortages and contnung power shortages, thermal projects (coal, lqud
fuel and gas), whch need a relatvely short gestaton perod, have been gettng prorty n fund
allotments.
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Hydropower Development n Inda: A Sector Assessment10
Dearth of good contractors: A matter of concern n the executon of large projects s the
dearth of competent and resourceful contractors, as t often results n tme and cost overruns of
hydro projects.
Inter-state aspects: A large number of hydropower projects havng common rver systems
between adjonng states are held up on account of nter-state aspects. Some of these projects
have receved the techno-economc clearance (TEC) of CEA but the nvestment sancton could not
be accorded due to nter-state aspects. A number of projects have also not been accorded CEA
clearance on account of nter-state ssues.
Environmental impact and rehabilitation issues: Important envronmental concerns
n hydro-electrc projects are: (a) rehabltaton of project-affected people; (b) deforestaton; (c)
lkely submergence of archaeologcal, relgous and hstorcal monuments; (d) protecton of flora,
fauna, forests, and wldlfe; (e) degradaton of catchment area; and (f) dsaster potental n the
event of earthquakes, reservor nduced sesmcty, surplusng of reservors, etc. Rehabltaton of
project-affected people s also a major ssue n mplementaton, especally n case of storage-based
hydro development. It s essentally a human problem and has to be dealt wth understandng
and senstvty. In fact, many tmes t s one of the man reasons for the delay n the executon11
of projects. Sardar Sarovar, Indra Sagar, Bansagar Tons and Tehr are some of the hydro projectswhere the progress had been severely hampered n the past from sustaned opposton to project
constructon by envronment actvsts and project-affected people.
Valuation of forestland based on net present value: The manner of valuaton of forest
landdverted for non-forestry purposes based on the net present value (NPV) of dverted land has
been a matter of concern for developers of hydropower projects. As per the recommendatons of a
Centrally Empowered Commttee (CEC), the NPV of forestland dverted for non-forest use has been
chargedatRs5.809.20lakhsperhectare,dependinguponthedensityofforestinvolved.Under
NPV, the state government has to pay to the CEC the NPV of forestland lost to mnng and other
projects, ncludng resettlement. State governments, n turn, have asked for exempton n case of
projects such as government hosptals, schools, and ranwater harvestng meant for publc welfare.
In some cases, t s argued that loadng of NPV on the project may result n ncrease n tarff of
hydro-electrcty.11 There s thus an urgent need to ratonalze NPV calculatons of forestland n caseof hydroelectrc projects. The matter had also come up before the Supreme Court of Inda, whch
has drected the formaton of a commttee to look nto varous ssues pertanng to assessment of
NPV. The Energy and Resources Insttute s also undertakng a study to analyze varous aspects of
NPV calculaton for hydroelectrc projects n Inda.
Law and order problems: Dsturbed law and order s one of the factors causng delay n
project executon and even suspenson of work. Some of the hydropower projects affected due to
these problems are Dulhast, Upper Sndh, Doyang and Dhansr.
Land acquisition problems: The problems arsng n acquston of land for hydropower
project are causng suspenson and delay n the constructon actvtes. Then Dam, Doyang, Ghatgar
pumped storage plants are some of the projects affected n the past due to ths problem.
Geological surprises: The features of the hydropower projects beng ste specfc, depend
on the geology, topography and hydrology at the ste. The constructon tme of a hydro project sgreatly nfluenced by the geology of the area and ts accessblty. Even when extensve nvestgaton
usng new technques of nvestgatons are undertaken, an element of uncertanty remans n the
sub-surface geology and the geologcal surprses durng actual constructon cannot be ruled out.
Ths n turn adds to the constructon rsks.
11Appendx 3 elaborates ssues related to clearances n ths regard.
12As per some reports, payment of NPV as per prevalng norms s lkely to result n 20% ncrease n project cost (by nearlyRs1,000 crores) as n the case of the proposed Tapamukh project n NER.
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1111Hydropower Development n Inda
Power evacuation: A number of the hydropower projects are located n remote stes and the
home states do not have adequate demand. Tmely provson of power evacuaton system presents
many complextes n such cases, snce (a) the benefcares are to be dentfed well n advance, and
(b) where there are serous rght-of-way constrants, excess capacty would have to be bult n one
go consderng lkely future development of projects n the evacuaton corrdor. Ths could result
n hgh transmsson tarffs ntally and also adversely affect sustanablty of the project n case of
slppages n projects. These ssues are especally relevant n case of projects n NER.
Lack of private sector interest: The prvate sector has also not been evncng much nterest n
takng up hydro projects n vew of non-avalablty of adequately nvestgated projects, constructon
rsks, etc.
Tariff and regulatory issues: The exstng tarff formulaton norms for hydro projects (based
on a cost plus approach) wth no premum for peakng servces and the provson for 12% free
power13 to dstressed states from the ntal years are also provng to be deterrents.
Small hydro segment: Development of small hydro often suffered due to naccessblty of
the stes, lack of power evacuaton nfrastructure, nvestgaton and constructon dffcultes, land
acquston and fnancng dffcultes, nadequaces n nsttutonal support and n some cases law
and order problems.
The Way Forward
The power planners n Inda are concerned about ths slow development of hydropower, especally
n vew of ts several advantages over other forms of energy sources ncludng ts role n promotng
the countrys energy securty, as dscussed n Secton III.
Hydropower Technologies
Inda has acheved a farly hgh degree of self-relance n hydropower technology. Nevertheless,
there s a contnung thrust toward adopton of new technologes. The focus on the cvl engneer-
ng sde s on usng technques and tools that could mprove qualty of plannng and nvestgatonand reduce constructon delays, and to adopt measures that wll help contan sltng problems. On
the electrcal and mechancal sde, the focus has been to mprove the lfe and performance of tur-
bnes (through metallurgcal mprovements, desgn and coatngs of blades, etc.) and to mnmze
problems n transportaton of equpment to project ste and n nstallaton due to space constrants
wthn the powerhouse (through use of splt transformers, gas nsulated substatons, etc.). The
country s also tryng to use new technologes lke powerformers, adjustable speed turbnes, etc.
Another technologcal advance n recent years has been the wdespread use of nformaton technol-
ogy n new projects for constructon montorng actvtes as well as for operaton and control after
project commssonng.
13As per the decson taken by the Central Government n 1990, 12% of power from the energy generated by the powerstaton would be suppled free of cost to those states of the regon (ncludng the state where the project s located)where dstress s caused by settng up the project at the specfc ste, lke submergence, dslocaton of populatons,etc. The Government of HP s seekng 12% of the delverable energy of the project for the perod startng from the dateof synchronzaton of the frst generatng unt and extendng up to 12 years from the date of commercal operatonof the project, at 18% of delverable energy of the project for a perod of the next 18 years and thereafter at 30% of thedelverable energy for the balance of the agreement perod beyond 30 years.
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Hydropower Development n Inda: A Sector Assessment12
Strategies for Accelerated
Hydropower Development
The Government has taken a number of ntatves n recent years to mprove the functonng of
the power sector and attract nvestments. There has also been a specal emphass on accelerated
hydropower development. These are brefly dscussed below.
Policy Liberalization
As mentoned earler the power sector was opened up for prvate sector partcpaton n generaton
n 1991 wth a vew to brng n addtonal resources for capacty addton ncludng n hydropower.
Prvate sector entrepreneurs were allowed to set up enterprses, ether as lcensees, or as generatng
companes. The generated power was to be sold to state electrcty boards (SEBs) on the bass of a
power purchase agreement. Further, a debt equty rato of up to 4:1 was made permssble for all
prospectve prvate enterprse entrants (.e., for both lcensees and generatng companes). In orderto ensure that the nvestor brngs n addtonalty of resources to the sector, t was also stpulated
that not less than 60% of the total outlay for the project has to come from sources other than In-
dan publc fnancal nsttutons (FIs).
Subsequently, n March 1992 a tarff notfcaton was ssued ncorporatng several ncentves
to prvate developers whch broadly covered ncentves for better avalablty of machnes, for
generaton of extra energy above the desgn energy, compensaton for hydrologcal rsks, etc. Later,
up to 100% foregn equty partcpaton was also permtted.
Policy on Hydropower Development (1998)
The above lberalzaton measures dd not provde expected mpetus to hydropower development;
t also dd not generate much nterest n prvate sector partcpaton n hydropower development.Based on a revew of the stuaton, the Government brought out a polcy on hydropower develop-
ment n 1998, whch, nter ala, lad down several polcy nstruments lke full budgetary support
to ongong projects, establshment of a power development fund, a mechansm to resolve nter-
state ssues, favorable tarff formulaton, etc. The polcy also outlned that the selecton process of
prvate developers would be such that for projects up to 100 MW n capacty, the memorandum
of understandng (MOU) route would be adopted, whereas for projects above 100 MW capacty,
a compettve bddng process would be adopted. Although all these polcy measures could not be
effectvely mplemented, the Government has been pushng ahead wth strategc ntatves from
tme to tme.
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1313Strateges for Accelerated Hydropower Development
Ranking of Potential Hydro Sites
A need was also felt n the meantme to evolve a comprehensve approach for the phased develop-
ment of the large untapped potental. Wth ths n vew, CEA prepared a vson document n 2001
gvng a road map for expedtng hydropower development n the country. Ths document ndcated
that n order to harness the entre remanng assessed hydropower potental of the country by
20252026, about Rs5,000 bllon would be requred for project mplementaton based on present
day costs and another Rs50 bllon would be requred for survey and nvestgatons, whch would
need to be completed by 20162017.14
As a follow-up of the recommendatons contaned n the vson document, CEA carred out
prelmnary rankng studes of about 400 schemes n the sx rver basns of the country. Schemes
totalng to about 107,000 MW have been ranked nto fve categores as A, B, C, D and E from the
pont of vew of attractveness (n decreasng order) for mplementaton. The aspects consdered
are resettlement and rehabltaton (R&R) ssues, nter-state/nternatonal aspects, potental of the
scheme, type and heght of dam, length of tunnel/channel, accessblty of ste, present status of
the project and the status of upstream or downstream developments. The prelmnary rankng study
report released n February 2002 was expected to provde nformaton to developers on the relatversks and attractveness of dfferent potental stes and also to take up more detaled nvestgatons
ncludng preparaton of feasblty reports.
Prime Ministers 50,000 MW Hydroelectric Initiative
In order to gve further fllp for development of hydro sector, the Prme Mnster of Inda announced
a 50,000 MW hydro ntatve n May 2003. Under ths program prefeasblty reports (PFRs) of 162
new projects wth an aggregate capacty of 47,930 MW dstrbuted across 16 states have been pre-
pared. Out of these 162 schemes, 73 schemes havng frst year ndcatve tarff below Rs2.50 have
been selected for preparaton of detaled project reports (DPRs) and subsequent mplementaton.15
The nstalled capacty of these schemes s about 33,000 MW. Of these schemes (32,000 MW), 70
are located n Brahmaputra, Indus and Ganga basns n the north and north-eastern part of thecountry. A lst of these schemes s gven n Appendx 2.
Studes done so far ndcate prospects of many projects delverng power at a cost of
Rs1.502.50perunit.Itisexpectedthattheavailabilityofashelfofwell-investigatedDPRswould
help to mnmze the gestaton perod, frm up the costs and also enlven the nterest of the prvate
sector n takng up hydro projects.
Streamlining of Clearance Procedures
Recognzng the fact that sanctonng of projects s tself a process that requres streamlnng, the
MOP, Mnstry of Fnance (MOF), MOEF and the Plannng Commsson are workng to mnmze the
tme cycle for sanctons by reengneerng processes. Specal emphass s beng gven to expedtng
envronmental clearances, as detaled n Attachment A to Appendx 3. Further, the Natonal Polcyon Resettlement and Rehabltaton for Project-Affected Famles, 2003 (NPRR, 2003) notfed by the
Mnstry of Rural Development (MORD) s expected to provde a better apprecaton of the ssues as
well as the oblgatons and rsks on the part of developers.
A TEC from CEA s now requred only n cases where nter-state water ssues are nvolved or
the captal cost of the project exceeds Rs25 bllon as mentoned n Appendx 3. CEA has also evolved
14CEA. 2001. Prelmnary Rankng Study of Hydro-electrc Schemes.
15The cost of preparaton of DPRs s proposed to be recovered later from the developers.
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Hydropower Development n Inda: A Sector Assessment14
modalitiesforsimplifiedtransferofTECsfromoneagencytoanother.Duringtheperiod19992004
TECs were transferred n favor of new executve agences n eght hydropower projects16.
As mentoned earler, the ECC, headed by the Prme Mnster of Inda, has also decded to
set up a panel under the cabnet secretary to look nto ssues concernng hydropower plants for
expedtng approvals.
In case of projects to be executed by the central power sector unts (CPSUs), the Government
has approved a three-stage clearance procedure n consultaton wth MOF and MOEF. The salent
features of ths procedure are gven n Box 2. The frst and second stage clearance system has helped
to cut down constructon tme by at least 2 years and consequently, the project cycle tme for a
typcal project has been reduced from over 7 years to around 5 years17.
16Report of the Standng Commttee on Energy, August 2005.
17Intervew wth Mr. R. V. Shan, Powerlne, January 2006.
Box 2. 3-Stage Clearance Process for Central Sector Projects
Stage I: Under Stage I, the central power sector unts (CPSUs) wll ncur expendture on survey,
nvestgatons and preparaton of a prefeasblty report for hydro projects and expendture up to Rs100
mllon wll be sanctoned by Mnstry of Power subject to the condton that the proposed hydro projects ncluded n the 5-year plan or long-term Hydro Electrc Power Development Plan. For an expendture
of more than Rs100 mllon, the same would be consdered by a commttee of the Publc Investment
Board (PIB). The actvtes under Stage 1 shall be completed wthn 1 year
from the date of sancton.
Stage II: Under ths stage, the CPSUs wll undertake actvtes relatng to detaled nvestgatons and
preparaton of detaled project reports (DPRs). Proposals costng Rs200 mllon and more wll requre
the approval of Fnance Mnster, whle those nvolvng a cost of over Rs500 mllon would requre
approval of the Cabnet Commttee on Economc Affars (CCEA). Projects whch have been found to
be commercally vable and have obtaned ste clearance from the Mnstry of Envronment and Forests
(MOEF) would be consdered for Stage II. Stage II development would nvolve preparaton of a DPR,
pre-constructon works, development of nfrastructure facltes and land acquston, etc. Actvtes
under Stage II shall normally be completed wthn 1.5 years from the date of sancton.
Stage III: Ths stage would requre approval of PIB/CCEA for nvestment decson n respect of constructon
of the project .Approval of PIB /CCEA would be sought after the Envronment & Forest clearance s
obtaned from MOEF and the techno-economc clearance from the Central Electrcty Authorty.
Electricity Act, 2003
Ths Act s expected to provde a new momentum for the overall development of the power sector
n Inda, ncludng for hydropower development. The provsons pertanng to tradng, open access,stand-alone systems, exempton of a power generatng company to obtan a lcense, mandatory
share for renewables and the development of the natonal power grd are of specal relevance n
ths context.
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1515Strateges for Accelerated Hydropower Development
In 2005 MOP ssued gudelnes for determnng the tarff by the bddng process. These
envsage that the purchaser of power shall procure the ste, get all the requste clearances, and
then bd for developng the project at the lowest cost of developed power on the bass of tarff.
The gudelnes for procurement of power are gven separately for base load and for peak load
requrements, whch should facltate settng up of peakng power plants.
Institutional and Budgetary Support
Consderng that the publc sector has played a major and almost exclusve role n developng hy-
dropower, the world over ncludng the developed countres and the fact that hydro n the prvately
owned ndependent power producer (IPP) mode has stll to catch on, the Government proposes
to pursue a judcous mx of both publc and prvate sector optons for ensurng accelerated hydro
development. The efforts beng made n pursung the prvate sector opton are covered n detal n
Secton VI. The am s to generate confdence n the prospectve entrepreneurs/developers and offer
terms and condtons, whch wll be attractve and cover undue rsks wthout jeopardzng consumer
nterests.
The Government has also taken a pragmatc vew that n the mmedate future the publcsector would have to play a domnant role n developng hydropower. Accordngly, a gross budgetary
support of nearly Rs175 bllon has been allocated to hydropower development, out of the total
allocaton of Rs250 bllon for the power sector for the 10thPlan(20022007).Thisalsoamounts
to a substantal ncrease compared to the allocaton made n the 9thPlan(19972002),whichwas
to the tune of Rs92 bllon.
A number of hydropower corporatons have also been establshed n the central sector
and n the jont sector (Central and State). These nclude the NHPC, North-Eastern Electrc Power
Corporaton (NEEPCO), Nathpa-Jhakr Power Corporaton (NJPC) now Satluj Jal Vdyut Ngam Lmted
(SJVNL) and Tehr Hdyro Development Corporaton (THDC). Besdes, the Natonal Thermal Power
Corporaton (NTPC) has been authorzed to take up hydro projects. Narmada Hydro Development
Corporaton (NHDC), a jont venture of the Natonal Hydroelectrc Power Corporaton (NHPC) and
the Government of Madhya Pradesh, has been consttuted to mplement Indra Sagar (1,000 MW)and Omkareshwar (560 MW) projects.
For executon of the projects as per schedule, a stronger montorng mechansm for
constructon/executon of the hydro projects has been put n place by MOP/CEA to realze the target
set for the 10th Plan. CEA nodal offcers regularly vst project stes so as to dentfy problem areas
and also gve regular feedback on the progress made and correctve steps to be taken to streamlne
the executon of the projects.
Efforts are also beng made to facltate long-term fnancng of loans. For example, the Power
Fnance Corporaton (PFC) s now gvng loans wth a maxmum repayment perod of 20 years wth
a moratorum of 6 months after commssonng of projects.18 Interest durng constructon s also
elgble for fnancng. There s a provson for refnancng after commssonng of the project. As per
prevals norms, 80% of the project cost can be debt fnanced for central sector projects and tate
sector projects n those states where reforms have been undertaken. For other states and IPPs upto 70% of the project cost can be fnanced. Key consderatons of PFC for fnancng hydropower
projects are projected tarff, qualty of DPR, purchasers fnancal health, power purchase agreement
and payment securty mechansm.
Project developers can also play a pro-actve role n mnmzng these barrers. A good
communcaton strategy wth the publc and especally the project-affected people s also mportant.
18Dscussons wth PFC.
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Hydropower Development n Inda: A Sector Assessment16
A recent publcaton of the Indan Natonal Hydropower Assocaton (INHA) has chroncled some of
the ntatves taken by NHPC n some of ther projects.19 These nclude ethnographc studes before
formulatng R&R plans, drect communcaton wth people, provson of schools, health care centers,
plantng of trees, adopton of bologcal, engneerng and bo-engneerng measures to check sol
eroson, etc. It also provdes examples of how adverse mpact or damage to any monument or
structure were avoded through proper plannng and desgn.
Recognzng the concern of the developers of the mpact of the free power provson on
tarffs, MOP had mooted a proposal to stagger the 12% free power keepng t low n the ntal years
and rasng t gradually to 12% n order to keep the ntal tarff vable (back-endng of tarff) durng
the loan repayment perod. The matter s taken up wth the state governments on a case-to-case
bass. The Government of Jammu and Kashmr has agreed to forego ts share of 12% free power,
from the Baglhar Hydroelectrc Project and the Government of Madhya Pradesh has also agreed to
forego ts free power share n the Omkareshwar Project.
The strateges beng adopted n Uttaranchal, Hmachal Pradesh, Skkm and NER are gven n
Appendxes 69.
19Reckonng the realty INHA, February 2005.
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17
Private Sector Participation
Progress So Far
As mentoned earler, the hydropower sector was opened up for prvate sector partc-paton n 1991. However, so far only about 910 MW has been commssoned, whch
consttutes less than 3% of the total nstalled hydropower capacty. The man developers
were Malana Power Company (Malana 86 MW), Japrakash Industres Lmted (Baspa
II 300 MW), and S. Kumar Group (Maheshwar 400 MW). The Malana project, Indas frst IPP,
s often haled as a success story. It was completed n a record tme of 30 months at a cost of
Rs350 crores. The project started operaton wth a 10-year power purchase agreement wth the
Rajasthan Spnnng & Weavng Mlls. The company was requred to provde 12% free power to H-
machal Pradesh and also pay wheelng charges to Hmachal Pradesh, Rajasthan and to the Power
Grd Corporaton of Inda Lmted (PGCIL), whose transmsson systems were used for the power
transfer. Presently t s supplyng power to Haryana, avalng of the tradng faclty.
Barriers in Private Participation
Development of hydropower projects had been mpeded n the past due to a varety of reasons lke
(a) long gestaton perod; (b) captal ntensve nature of projects; (c) requrements of statutory clear-
ances; (d) geologcal surprses often encountered; (e) land acquston problems; (f) law and order
problems n some cases; (g) R&R problems; etc., as detaled n Secton IV. In overall terms, ths pre-
sented a hgher level of rsk, whch the prvate sector s generally averse n takng. Ths often meant
tme and cost overruns of projects. Non-avalablty of long-term debt fnancng, credtworthness of
the utltes to whom they have to sell the power,20 provson of free power, and front-ended tarffs
were also factors adversely mpactng the foray of the prvate sector nto hydropower development.
The reluctance of FIs to fund hydropower projects n the prvate sector s also a man factor
responsble for the slow development of hydro projects. Ths can be traced to the hgh levels of
constructon rsks that hydropower projects often encounter besdes general problems of IPPs lkepayment securty, etc. The FIs had therefore, been seekng addtonal comforts lke government
guarantees, escrow accounts, etc. However, encouraged by the varous provsons of the Electrcty Act
2003 such as open access, recognton of power tradng and settng up of regulatory commssons,
the FIs are no longer lookng for government guarantees and have reterated that there would be
no dearth of funds for good projects wth vable tarffs promoted by credble developers.21
20The lenders also look forward long-term power purchase agreements.
21MOP. 2005. Draft Gudelnes for Development of Hydro Electrc Project-Stes by Prvate Developers.
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Hydropower Development n Inda: A Sector Assessment18
Review by the Standing Committee on Energy
The parlamentary commttee on energy n ts revew of the hydropower sector had also noted wth
concern the poor contrbuton of the prvate sector. The commttee has observed the need to gen-
erate confdence n prospectve developers and offer terms and condtons whch wll be attractve
and cover undue rsks wthout jeopardzng consumer nterests.22 The commttee has also recom-
mended that the Government should frame gudelnes for development of hydropower projects on
the lnes prevalent n the Unted States, where development rghts are decded mostly on the bass
of qualfcatons and credblty of the developer. The objectve s to encourage only those havng
experence n hydropower development and an mpeccable track record.
The commttee has also concluded that due to long gestaton perod and the many
uncertantes nvolved, hydropower projects, especally the larger ones, may not fnd favor wth
the lenders. Accordngly, t has recommended that mult-purpose projects, those nvolvng nter-
state ssues and cooperaton wth neghborng countres, pumped storage schemes, and projects
n the NER may be contnued n the publc sector. The followng types of projects, accordng to the
commttee, may be posed for prvate sector partcpaton:
Extenson projects where dam and major structures have already been constructed
and the new works proposed cover manly powerhouse buldngs and nstallaton
of generatng equpment;
Projects at the toe of exstng dams; and
Run-of-rver schemes nvolvng mnmum underground works.
Government Initiatives
As mentoned earler, the Government has taken a number of measures n recent years to accelerate
hydropower development (of specal relevance to prvate developers are the preparaton of a shelf
of well nvestgated projects, whch could substantally reduce rsk perceptons), streamlnng of the
clearance procedures, the provsons of open access and tradng as per Electrcty Act 2003, etc. Ef-forts are also beng made to make long-term debt avalable. As mentoned n Secton V, PFC s now
gvng loans to prvate sector hydropower projects for up to 70% of the project cost wth a max-
mum repayment perod of 20 years wth a moratorum for constructon perod plus 6 months.23
In January 2004, MOP consttuted an nter-nsttutonal group (IIG) of FIs wth an objectve to
expedte the fnancal closure of prvate sector power generaton projects and to address last-mnute
ssues mpedng project development and fnancng. The members of IIG are the State Bank of Inda
(SBI), Industral Credt and Investment Corporaton of Inda Lmted (ICICI), Industral Development
Bank of Inda (IDBI), Lfe Insurance Corporaton (LIC), PFC and Infrastructure Development Fnance
Company (IDFC). Snce ts formaton, 11 projects wth an aggregate capacty of 4,001.8 MW have
acheved fnancal closure. Currently, sx projects wth an aggregate capacty of about 7,532 MW
are under IIGs consderaton.As mentoned earler, MOP has already ssued gudelnes for tarff based bddng. It has
also recently notfed draft gudelnes for the development of hydropower project stes by prvate
developers.24 The salent features of these gudelnes are n Appendx 5.
22Report of the Standng Commttee on Energy, August 2005.
23Teesta III (1,200 MW) and Teesta VI (360 MW) promoted by Teesta Urja Lmted and Lanco Energy, respectvely, as jontventure projects wth SPDCL n Skkm, are under the actve consderaton of PFC.
24MOP. 2005. Gudelnes for Development of Hydroelectrc Project Stes by Prvate Developer.
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1919Prvate Sector Partcpaton
State-level Initiatives
The hydro-rch states lke Uttaranchal, Hmachal Pradesh and Skkm have taken a number
of ntatves n recent years to promote a balanced growth of publc and prvate sector projects
(Appendxes 69). These are brefly dscussed below.
Uttarakhand: The key features of the government of uttarakhands polcy are (a) potentalhydro projects dentfed by the government of Uttaranchal are advertsed for nternatonal
compettve bds; (b) bds are nvted over a mnmum premum, payable upfront to the government
of uttarakhand, at the rate of Rs5 crores per project; (c) projects are allocated to bdders makng the
hghest bd over and above the upfront mnmum premum; (d) projects are allocated for an ntal
perod of 45 years on a buld-own-operate-and-transfer bass; (e) the developers of the project
have the rght to sell the power outsde the state; no agency of the state wll guarantee purchase of
power; and (f) 12% of electrcty generated s to be made avalable free of cost to the state durng
entre lfe of the project.
Himachal Pradesh: The key features of the polcy of Hmachal Pradesh are (a) selecton
of developer on MOU route for projects up to 100 MW and based on nternatonal compettve
bddng route for projects above 100 MW; (b) no clearances from CEA for projects selected on
compettve bddng route for projects costng up to Rs2,500 crores; (c) secondary energy rate to be
at par wth prmary energy, (d) premum on peak power, and (e) 100% foregn equty permtted on
the automatc approval route provded t does exceed Rs1,500 crores. Also for projects above 100
MW nstalled capacty, the government has reserved the rght of equty partcpaton up to 49% on
a selectve bass.
Sikkim: In order to expedte hydropower development through prvate sector partcpaton
n the State, the government of Skkm has formed the Skkm Power Development Corporaton Ltd
(SPDCL), to facltate jont venture projects between a prvate power developer and the government.
For SPDCL-promoted projects and as per the MOU sgned between the Skkm government and
a prvate power developer, 12% free power would be made avalable to the State and the prvate
power developer would be permtted to sell ts entre balance power drectly to needy states or
through power tradng agences, whchever way they would lke to sell. In all SPDCL-promotedjont venture projects, the governments equty partcpaton ranges from a mnmum of 10% to a
maxmum of 49%.
Looking Ahead
The above analyss shows that prvate sector partcpaton n hydropower development s lkely
to ncrease apprecably n the comng years. The excellent ntal response from prvate developers n
a number of states, despte the provson for free power and upfront premum and the fact that the
tarffs may eventually come under the purvew of the regulator, shows that there s an apprecable
reducton n ther rsk perceptons. Early mplementaton of the open access provsons, ncrease
n tradng actvty and premum for peakng power (as proposed n Government polces) would
further enlven the nterest of the prvate sector. A publc-prvate partnershp approach could alsocontrbute to ths.
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Hydropower Development n Inda: A Sector Assessment20
The Small Hydro Segment
Inda has an dentfed small hydro (up to 25 MW) potental of nearly 10,000 MW dstrbuted over
4,000 stes. It s estmated there s stll an undentfed potental of almost 5000 MW. Nearly 1,500
MW of potental has already been tapped and projects amountng to around 600 MW are underconstructon. Table 5 shows state-wse detals of potental and exstng and ongong projects.
Potential Existing Projects Ongoing Projects
No. of Capacity No. of Capacity No. of CapacitySites (MW) Sites (MW) Sites (MW)
Andhra Pradesh 286 254.63 52 158.26 9 23.85Arunachal 492 1,059.03 51 36.37 26 47.64PradeshAssam 46 118 3 2.11 8 51.00
Bhar 92 194.02 4 44.90 10 15.00Chattsgarh 47 57.90 3 3.50 3 15.50Goa 3 2.6 1 0.05Gujrat 290 156.83 2 7.00Harvana 22 30.05 4 48.30Hmachal Pradesh 323 1,624.78 44 93.54 10 67.20Jamuna & Kashmr 201 1,207.27 27 102.24 9 13.31Jharkhand 89 170.05 6 4.05 8 34.85Karnataka 230 625.61 40 211.68 16 79.10Kerala 198 466.25 10 72.02 10 73.00Madhya Pradesh 85 336.325 7 38.96 4 26.40Mahafashtra 234 599.47 27 207.08 4 15.75Manpur 96 105.63 8 5.45 3 2.75Meghalaya 98 181.5 3 30.71 9 3.28Mzoram 88 190.32 16 14.78 3 15.50Nagaland 86 181.39 8 20.47 6 12.40
Orssa 161 156.76 6 7.30 7 40.97Punjab 78 65.26 21 108.40 1 2.70Rajasthan 49 27.26 10 23.85Skkm 68 202.75 12 355.60 5 15.20Taml Nadu 147 338.92 11 76.40 2 7.90Trpura 8 9.85 3 16.01Uttaranchal 354 1,478.24 72 65.20 29 32.42Uttar Pradesh 211 267.061 8 21.5 1 3.60West Bengal 145 182.62 18 92.28 5 5.62Andaman and Ncobar 6 6.40 1 5.25Total 4,233 10,324.37 478 1,553.26 188 604.94
Source: Powerlne, 2005.
Table 5: State-wise Details of Small Hydro Development
State/Union Teritory
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2121The Small Hydro Segment
Small hydropower projects (SHPs) are generally developed n the potental regons by the SEBs/
state renewable energy development agences.25 Most of these SHP projects are grd-connected.
However, there are some projects that are decentralzed and are managed by local communtes/
NGOs. The Mcro and Pco hydropower projects come under the socal sector whch are set up
under rural electrfcaton programs and are mostly stand-alone/mn grd systems feedng power to
the under-prvleged populaton lvng n remote areas.
The Mnstry of Non-conventonal Energy Resources (MNES), whch s overseeng the
development of small hydropower, has set a target of tappng around 2,000 MW tll 2012. Varous
physcal and fnancal ncentves are beng extended to develop ths sector. The focus of the SHP
program at MNES s now toward commercalzaton through prvate sector partcpaton. Some of
the mportant ntatves taken by MNES are dscussed below.
Salient Features of UNDP-GEF Project
In 1995 MNES took up a project wth support from the Global Envronment Faclty (GEF)
and Unted Natons Development Programme (UNDP), amed at optmal utlzaton of
small hydro resources.26
Salent features are n Box 3. Ths project was completed n 2004.
Provision of Incentives
MNES s also provdng fnancal support to states for (a) dentfcaton of new potental stes and
preparaton of a perspectve plan, (b) detaled survey and nvestgaton and preparaton of DPRs, (c)
project mplementaton, and (d) for mplementaton of off-grd mcro hydro projects up to 999 kW
for rural electrfcaton development n ther respectve state. The level of support beng provded s
showninTables69.
25In states lke Andhra Pradesh, Hmachal Pradesh, Punjab, Orssa and Uttaranchal prvate players have also comeforward.
26The project had an approved outlay of Rs450 mllon ($5 mllon) shared through GEF nputs of $7.5 mllon andGovernment nputs of Rs224.8 mllon. The project was executed by MNES and montored by UNDP.
Identification of up to Identification of More Than
50 New Sites 50 New Sites(Rs lakhs) (Rs lakhs)
North-Eastern Regon, Skkm, Jamuna andKashmr, Hmachal Pradesh, and Uttaranchal 22.50 30.00(Specal Category States)Other States/Unon Terrtores 15.00 22.50
State/Union Territory
Table 6: MNES Support for Assessment of Potential Preparation of Perspective Plan
Above 1 MW and Above 10 MW andUp to 1 MW up to 10 MW up to 25 MW
(Rs lakhs) (Rs lakhs) (Rs lakhs)
North-Eastern Regon, Skkm, Jamuna andKashmr, Hmachal Pradesh, and Uttaranchal(Specal Category States) 1.75 3.00 5.00
Notfed hlly regons of all other states andslands 1.50 2.50 4.00
Plan and other regons of all states 1.25 2.00 3.00
Area
Table 7: MNES Support for Preparation of Detailed Project Reports
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Hydropower Development n Inda: A Sector Assessment22
Area Below 500 kW Above 1 MW Above 5 MW Above 15 MW500 kW up to and up to and up to and up to
1 MW 5 MW 15 MW 25 MW
Interest subsdy Plan 5.00% 2.50% 2.00% 1.50%for commercalprojects
Hlly and North-Eastern Regon 7.50% 5.00% 3.00% 2.00
Captal subsdy North-Eastern 90% cost of 90% cost of 75% cost of the Equpment Cost+ Nlfor government Regon and the project the project project up to 25% of Cvl costprojects Skkm up to Rs up to Rs Rs45,000/-kW lmted to Rs22.50
75,000/-kW 60,000/-kW crores/project
Mddle Hmala- Equpment Cost+ Equpment Cost+ Nlyas, Ladakh, and 25% of Cvl Cost 25% of Cvl CostAndaman & up to Rs3.00 lmted to Rs15Ncobar Islands crores/MW crores/project
Other areas Equpment Cost+ Equpment Cost+ Nl(only notfed 25% of Cvl Cost 25% of Cvl Costhlly regons) up to Rs1.5 crores lmted to Rs7.5
per MW crores/project
Renovaton and modernzaton of Lmted to Rs10 Nlprojects crores/project
Development/Upgradaton ofwater mll
Mechancal mode Rs30,000Mechancal/electrcal mode Rs60,000
Table 8: MNES support for Project Implementation
Equpment Cost+ 50% ofCvl Cost up to Rs45,000/kW
Equpment Cost+ 50% of
Cvl Cost up to Rs30,000/kW
Up to Rs2 crores/MW
Table 9: MNES Support for Off-grid Micro Hydro Projects for Rural Electrification
Region Up to 100 kW Above 100 kW & up to999 kW
For North-Eastern Regon, Skkm, Jamuna and 90% of the project cost lmted Rs60 lakhs + Rs43,250/kWKashmr, Hmachal Pradesh, and Uttaranchal to Rs60,000/kW
Notfed hlly regons of other states and 90% of the project cost lmted Rs60 lakhs + Rs43,250/kWslands to Rs60,000/kW
Plan and other regons of all other states 90% of the project cost lmted Rs45 lakhs + Rs29,250/kWto Rs45,000/kW
Barriers in Development of Small Hydro Segment
The barrers perceved n development of the small hydro segment are techncal, procedural and
cost-related n nature. The techncal barrers nclude factors such as accessblty to the stes andrsks nvolved n transportng heavy equpments to the stes. The procedural ssues prmarly relate
to the number of clearances requred before takng the project. Typcally, a developer s requred to
get a project allotment from the state nodal agency, obtan clearance from MOEF where forestland
s nvolved (n projects costng more than Rs100 crores), clearance from the Irrgaton/Water Re-
sources Department, clearance from the state government on land avalablty, etc. In the absence
of any provson for a sngle wndow clearance, the process of obtanng these clearances/approvals
may take a long tme. In some areas securty problems are also experenced due to nsurgency. On
the cost front, t s a matter of some concern that equpment prces are not gong down due to the
lmted number of players.
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2323The Small Hydro Segment
State-level Policies
As mentoned earler the development of small hydro has been largely governed by state-level
polces. The regulatory commssons are now lookng nto these polces. A few of the regulatory
commssons have come out wth ther orders whch cover buy-back rate, wheelng and bankng
condtons, whch vares from state to state. For example, the buy-back rate n Uttar Pradesh s
Rs3.39 /kWh compared to Rs2.69/kWh n Karnataka. Smlarly the lmt for bankng surplus energy
s 2.5% n Karnataka, whereas t s 10% n Maharashtra. Snce electrcty s a concurrent subject as
per the Consttuton of Inda, these varatons could be expected. However, consderng the renewed
thrust beng gven for renewable energy n Electrcty Act 2003, t s lkely that there may be some
harmonzaton of approaches wth ncreased ncentves amed at expandng the share of renewable
sources n the power procurement portfolo of dstrbuton companes.
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Hydropower Development n Inda: A Sector Assessment24
Energy Security Issues and
Regional Cooperation inHydropower Development
In recent years, as a result of economc and populaton growth, South Asa has experenced a
sharp ncrease n energy consumpton. As a consequence, the growth n commercal energy
demand n these countres s very hgh compared to other regons of the world, and s projected
to contnue to grow n future. Ths rapdly growng energy demand coupled wth nadequate
supples s a challenge for the energy securty of South Asa. Despte ts rch resource endowment,
the regon contnues to face power shortages, whch has constraned economc growth.
The regon s well endowed wth natural resources and there s tremendous scope for
cooperaton n the feld of energy. Nepal and Bhutan, the two neghborng countres of Inda have
rch hydropower potental far n excess of ther domestc requrement. Inda wth ts large demandsupply gap offers a ready market for these two countres. Cooperaton between Inda, Nepal and
Bhutan on the energy front can therefore provde a wn-wn stuaton for all. Inda could mport
hydropower to meet part of the countrys energy needs. Nepal and Bhutan, on the other hand,
could earn rch revenue to boost ther economy. Besdes, t could open up optons of electrfyng
the border areas of these countres by extendng the power grd of Inda. Ths could also lead to the
evoluton of the South Asan Assocaton for Regonal Cooperaton (SAARC) power grd. The status
of cooperaton between these countres s dscussed below.
Cooperation with Nepal
Inda has been assstng Nepal n the development of ts hydropower potental. Four hydroelectrc
schemes, namely, Pokhra, Trsul, Western and Gandhak and Devghat, have been mplementedn Nepal wth fnancal and techncal assstance from Inda. The Government of Inda nomnated
the Power Tradng Corporaton (PTC) as the nodal agency to deal wth matters relatng to power
exchange wth Nepal n July 2001. PTC s also the sole agency from the Indan sde for fnalzng all
commercal and techncal arrangements/systems wth Nepal Electrcty Authorty (NEA) and coord-
naton wth assocated Indan agences. The blateral exchange of power at the borders between the
two countres s presently at a level of 50 MW. The two sdes through Indo-Nepal Power Exchange
Commttee decde the tarff jontly at perodc ntervals wth the underlyng prncple of meetng
the cost of supply of power. The power exchange between the two countres s made possble by
nterconnectons at the voltage levels of 11 kV, 33 kV and 132 kV at 22 nterconnecton ponts.
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2525Energy Securty Issues and Regonal Cooperaton n Hydropower Development
During20032004Nepalhadimportedaround186millionunits(MUs)ofenergyfromIndiaand
exported 138.90 MUs. As per the water resources strategy of Nepal, by 2017 Nepal ams to develop
2,230 MW hydropower to meet the projected demand of 2,230 MW ncludng 400 MW for export
to Inda. Under a hgh growth scenaro, the strategy projects that by 2027 the country would earn
sgnfcant natonal revenue by developng a total hydropower capacty of 22,000 MW ncludng
15,000 MW for exports.27
Three major mult-purpose projects n Nepal, vz. Karnal, Pancheshwar, and Saptakosh are
presently under dscusson at varous levels as mutually benefcal projects. The feasblty report
for the Karnal mult-purpose project (10,800 MW) was prepared n 1989. Key parameters of ths
project are to be fnalzed after mutual dscussons. A Jont Commttee on Water Resources headed
by the respectve water resources secretares has been consttuted to act as an umbrella commttee
to ensure mplementaton of the exstng agreements and also to oversee work of all techncal and
expert-level commttees related wth water resources. Durng the meetng of the Jont Commttee,
t was decded to ntate consultatons for the development of the Karnal Project. Investgatons
have been carred out n respect of the Pancheshwar mult-purpose scheme (5,600 MW) by the two
countres n ther respectve terrtores. A Jont Project Offce (JPO) was establshed n Kathmandu
n December 1999 to carry out addtonal nvestgatons and for preparaton of the DPR. The JPOwas closed n July 2002. A draft DPR has been prepared by the Indan sde, whch s to be mutually
agreed to. Development of ths project s covered under the Integrated Mahakal Treaty sgned
between Nepal and Inda n February 1996. Inda has offered fnancal and techncal assstance for
nvestgaton and preparaton of the DPR of the Saptakosh Hgh Dam Multpurpose project and Sun
Kos Storage-cum-Dverson Scheme. A JPO was establshed on 4 August 2004 n Bratnagar, Nepal,
for takng up feld nvestgatons and studes for preparaton of the jont DPR n about 30 months.
Besdes the above, a number of other projects, such as Burh Gandak (600 MW) and Upper Karnal
(300 MW), are also under dscusson between Inda and Nepal. Jont techncal expert groups have
been consttuted for the above projects for gudance for carryng out nvestgatons and preparaton
of the DPRs.
Cooperation with Bhutan
Inda has had a long assocaton n provdng techncal and fnancal assstance to Bhutan n the de-
velopment of ts hydropower resources. Electrcty s Bhutans prncpal export commodty and the
largest revenue earner. Chukha hydropower project (336 MW) has been an mportant project de-
veloped as a jont venture between the Government of Inda and the Royal Government of Bhutan,
wth the Government of Inda provdng the funds for the project. The constructon of the Chukha
hydroelectrc plant was started n 1978. It was successfully commssoned n 1988. The project
was handed over to Bhutanese management n June 1991. About 84% of energy generated from
Chukha plant s exported to Inda.The Kurchu Hydroelectrc Project (60 MW) n eastern Bhutan
has also been mplemented wth Indan fnancal and techncal assstance. Energy traded durng
20032004wasaround1,752MU(1,495MUfromtheChukhaand257MUfromKurichhu).
Another project, vz., the Tala Hydroelectrc Project (1020 MW) has been taken up formplementaton and s beng executed by Tala Hydro-electrc Project Authorty (THPA) comprsng
the Indan and Bhutanese engneers. Desgn and engneerng consultancy for the project n respect
of the electro-mechancal and cvl works s beng rendered by the CEA, Central Water Commsson
(CWC), and Water & Power Consultancy Servces (WAPCOS). The project s beng funded by Inda
through grant and loan and a major porton of the power generated wll be utlzed by Inda. The
projectisscheduledforcompletionby20052006.InvestigationofSankoshmulti-purposeproject
27SASEC. 2004. Issues Paper on Regonal Energy Cooperaton, prepared by Leena Srvastava and Neha Msra.
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Hydropower Development n Inda: A Sector Assessment26
(4,060 MW) has been completed by the CWC and DPR prepared by the CEA/CWC. Investgaton
of two hydroelectrc projects, namely Wangchu (900 MW) and Bun akha (180 MW), have been
completed and the DPR prepared. Further, the Government has agreed to provde assstance for
development of two hydro projects, namely Mangdechhu (360/600 MW) and Punatsangchhu
(870/1000 MW). A mult-dscplnary team vsted the Punatsangchu project ste n May 2004 for
dentfcaton of alternatve stes and also to frm up assocated survey and nvestgaton for the
preparaton of DPR and at present, ths survey and nvestgaton work s n progress.28
Cooperation with Myanmar
The possblty of developng the Tamanth project (1,020 MW) n Myanmar and mportng power
to Inda has been under consderaton for some tme. Presently NHPC s preparng a PFR for ths
project.
28TERI Energy Data Drectory & Yearbook, 200405.
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Conclusions
I
ndas power sector s posed to grow at a fast pace n the comng years. Ths s consdered
crucal to sustan the countrys economc growth. The reform measures beng mplemented
and polcy ntatves taken by the Central and state governments, as dscussed n the report,are expected to provde an enablng envronment for ths.
Inda has an assessed hydropower potental to the tune of 84,000 MW at 60% load factor;
out of ths only about 20% has been developed so far. Consderng the large untapped potental and
the ntrnsc characterstcs of hydropower n promotng the countrys energy securty and flexblty
n system operaton, the Government s gvng a thrust to accelerate hydropower development.
In the past varous factors such as dearth of adequately nvestgated projects, envronmental
concerns, R&R ssues, land acquston problems, regulatory ssues, long clearance approval
procedures, power evacuaton problems, dearth of good contractors, and n some cases, nter-state
ssues and law and order problems have contrbuted to the slow pace of hydropower development.
There has been large tme and cost overruns n case of some projects due to geologcal surprses,
R&R ssues, etc.
The above concerns are beng addressed through a number of legslatve and polcy ntatvesat the Central and state level. As dscussed n detal n the report, these nclude preparaton of a shelf
of well-nvestgated projects and streamlnng of statutory clearances and approvals, establshment
of ndependent regulatory commssons, provson for long-term fnancng for projects, ncreased
flexblty n sale of power, etc. In May 2003, the Prme Mnster of Inda launched a 50,000 MW hydro
ntatve. Under ths scheme, DPRs are beng prepared for 73 schemes, whch have an ndcatve frst
year tarff below Rs2.50. Ths would provde a shelf of farly well nvestgated low tarff projects to
prospectve developers. Rsk perceptons n takng up the projects and the possbltes of tme and
cost overruns are also expected to get mnmzed. Of these schemes (total capacty 32,000 MW), 70
are located n the Brahmaputra, Indus and Ganga basns n the north and north-eastern part of the
country. Most of these are run-of-rver schemes.
The Government has formulated a number of measures to address the ssues related to water
shed management upstream and downstream. For example, n the case of mult-purpose schemes,
Electrcty Act 2003 requres that the state government and t