Rattle HEPP deal: shrouded in ambiguity

…JK state needs to come clean

Dr. Javid Iqbal
Srinagar, Publish Date: Sep 25 2018 9:45PM | Updated Date: Sep 25 2018 9:45PM
Rattle HEPP deal: shrouded in ambiguityFile Photo

JK state government presently under governor’s rule continues to deprive the people of the state of the rights to own their assets. It has been going on for long, too long for comfort. The latest blow is the deal made on ‘Rattle Hydroelectric Power Project (Rattle HEPP)’. The deal is shrouded in ambiguity. Rattle HEPP is being bartered away to an unknown Public Sector Unit (PSU) under a joint venture on undisclosed terms and conditions. The main thrust remains on, what has remained so obvious over a long period of time. It translates to transferring the assets of the state to subsidiary units of Government of India (GOI), leaving the state to feed on loaves and crumbs of the deal. Rattle HEPP follows the sordid tale of earlier times.  

Rattle HEPP like the earlier projects has suffered delay in implementation, which is bound to lead to project over-run costs. The project was conceived on River Chenab at Drabshala in Kishtwar. It was slated to be completed in 2017 at an estimated cost of Rs 6000 crores. However, in the later part of the year 2018, the government is still seeking to get on with the project. And, in the process of doing so, it is seeking an outside agency to execute it. It is thus going to be yet another power project, which is being taken beyond the confines of the state control. The state continues to be deprived of the freedom to choose its financial partner, where financing would lead to equally beneficial partnership, the norm in such deals worldwide. Instead, the interests of the state are being made subservient to the interests of hegemonic agencies. 

Rattle HEPP was allotted to Hyderabad based M/s GVK on BOOT (built, own, operate, transfer) basis in 2010 for 35 years. The project had been termed as “one of the most viable and doable projects” by experts. It was the first hydroelectric project which was given for implementation through tariff based international competitive bidding in which PDC would get 15 percent generation as royalty and enjoy first right to purchase for 55 percent generation at the rate of Rs 1.44/unit. M/s GVK however abandoned the project in July 2014 following controversy over tariff rates, taken to be high. The contractor had also cited “insecure atmosphere” as a reason for leaving the project midway.  It took the government more or less three years to finally terminate the contract with the company. The termination came on February 2, 2017; vide order No. 23-PDD. The state government did engage a consultant for valuation of the assets created and at the same time enchased Rs 52 crore bank guarantees which were deposited by the contractor. The delayed termination however stands largely unexplained. State government should have acted promptly in valuation of the assets created, as and when GVK abandoned the contract in 2014, instead of delaying the matter for as much as three years, adding to what the project is going to cost eventually.  

Subsequent to the termination, it was put forth that JK state government is all set to handover construction of 850 MW Ratle HEPP to JK State Power Development Corporation (JKSPDC). In the ensuing budget session the economic survey tabled by   government read, “The PDC has been assigned by government as implementation agency to find other mode of execution of the project.” The mode of execution has however taken an undesirable turn; with State Administrative Council (SAC) in its 5th of September 2018 meet according sanction to a separate joint venture company to develop Ratle HEPP. As reported, the joint venture company is intended to be set up by JKSPDC in partnership with an undisclosed Public Sector Unit (PSU) of GOI. This could be another attempt to barter away the interests of the state. Given the bitter experience of the joint ventures of the past, such as Chenab Valley Power Projects Ltd (CVPP) scepticism is bound to grow. CVPP conceived for execution of three power projects namely Pakal Dul, Kiru and Kawer with a cumulative capacity of 2120 MWs, reserves 51 percent share for PSU’s of GOI: NHPC (49%) and Power Trading Corporation (PTC: 2%) leaving JKSPDC with 49 percent, the majority stake is thus bound to prevail. CVPP was dubiously conceived; in spite of the fact that NHPC had earlier failed to execute Pakal Dul HEPP allotted to it in 1999-2000 under Build, Operate and Transfer (BOT) basis and deserved to be set aside in any future deal for state power projects. Additionally, NHPC has failed to return power projects to state, as per agreements.

Fielding PSU’s of GOI in execution of state power projects is justified on the basis of JK state lacking financial muscle. One after another state government thus collaborate, ever eager to parade the justification. However, the execution of Baghlihar HEPP belies the paraded justification, as raising funds was successfully arranged with a consortium of banks.  The state could provide its own margin from the corpus, created out of the funds generated by collecting water usage charges, which as per the estimates of civil society formations could have accumulated to about Rs 5000/- crores. The funds generated were slated to be used for financing future power projects.  JK Socio-Economic Coordination Committee (JKSECC), an amalgam of 27 civil society formations of trade, tourism, industrial, horticulture, travel, houseboat, transport chambers and associations strongly recommended resorting to such funding measures, in a recent press conference. This may be taken as the collective voice of the people of JK State, and implemented verbatim.   

 Yaar Zinda, Sohbat [Reunion is subordinate to survival]

 

iqbal.javid46@ gmail.com  

 

 

 

 

 

    

 

 

 

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