The government at all levels needs to create an enabling environment to tap hydropower’s unrealised potential.
Electricity is a key infrastructural input that has a pivotal role in sustaining economic growth. The Indian economy is set to traverse an impressive growth trajectory. In order to sustain a targeted GDP growth rate of 8-9 per cent, power production needs to grow at a commensurate rate. The existing power shortages need to be wiped out by building additional capacities quickly, so that the national developmental goal is not crippled.
At present, India’s installed capacity exceeds 153 GW, against a projected demand of 200 GW by the end of the 11th Plan period (2007-12). With the ambitious target of providing “Power to All by 2012” and providing “Access to electricity to villages” under the government’s flagship scheme, Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), ensuring the successful implementation of the capacity addition programme of 78,700 MW in the current Plan period is of paramount importance. We are already midway in the 11th Plan period and we have been able to add only about 18,500 MW. Another 60,000 MW is required to be added during the remaining Plan period. This in itself is a great challenge for the power sector.
The presently installed capacity of hydropower is around 37 GW which makes for 25 per cent of the total installed capacity against the desired mix of 40 per cent from hydropower and 60 per cent from thermal and others. With fast-depleting reserves of fossil fuels, including coal and gas, and increasing awareness and concerns about global warming and climate change, there is an urgent need to re-align our policy planning and strategies to conserve our limited fossil fuel reserves and bridge the demand-supply gap by generating more power from renewable energy sources, especially hydropower, thereby addressing global concerns for a clean development mechanism together with providing energy security to the nation.
India is fortunately endowed with an enormous hydro-potential of about 149 GW, 76 per cent of which is yet to be harnessed. Hydropower provides cheap and reliable power which is relatively inflation-free, besides being environmentally benign. The government has taken several policy initiatives to boost the growth of hydropower in the country- Hydro Policy 1998, Three Stage Clearance, Ranking Study of Potential Hydropower Sites, the 50,000 MW hydro-initiative, Mega Power Project Policy, Electricity Act 2003, Tariff Policy 2006, National R&R Policy 2007, and recently, Hydro Policy 2008.
Despite these policy initiatives, the development of hydropower projects involves numerous complexities and is fraught with various issues, concerns and challenges.
Most hydro-projects are located in remote and inaccessible areas, mostly in difficult and hilly terrain. The approach roads through mountains are often prone to landslides, falling rocks, etc. Some projects also face snow and inclement weather conditions. Insurgency and militant activities in remote areas pose a further challenge to the hydropower developer. It becomes difficult to mobilise and retain trained and skilled manpower under such adverse conditions.
Land acquisition has become a significant challenge for hydro-projects. It involves both government and private land. The diversion of forest land is a long-drawn process involving both state and Central governments. As regards private land, the process is elaborate and time-consuming. In some cases, opposition by locals, anti-dam activists and NGOs poses an additional challenge in implementing hydro-projects.
Obtaining environmental and forest clearances nowadays involves multi-stage scrutiny, making the process cumbersome and time-consuming. In some cases, getting wildlife clearance is an additional challenge in view of heightened concerns for the preservation of our wildlife.
Most of the hydro-potential lies in the Himalayan regions which are young, fragile and unstable. Geological surprises are typical in the Himalayan geology and are a major challenge, given the risks of time and cost overruns. The occurrence of natural calamities like cloud burst, flash floods, etc, makes project construction in river valleys even more risky.
Although the development of hydropower is a major opportunity in our country, there is an overall dearth of competent contractors who can smoothly steer hydro-projects through all the challenges and risks during their course of execution. The availability of trained and skilled manpower tailor-made to deal with the sector is also limited. The sudden expansion of demand for electro-mechanical and hydro-mechanical equipment for hydropower projects has created a challenge for matching manufacturing and testing facilities.
There is an emerging tendency on the part of home states towards demanding upfront premium for the allotment of hydro-projects to developers. Home states in some cases have started imposing new conditions and making additional demands on the hydropower developer over and above those prevalent at the time of granting CCEA clearance to projects. Besides, many hydro-projects in India are mired in inter-state disputes between co-riparian states for water and power sharing, which acts as an impediment to the development of hydro-potential.
Due to their long gestation period, massive initial capital investment and smaller internal rate of return, hydro-projects typically face a resource crunch. The absence of long-tenure loans and returns on capital during the construction period are additional challenges for the hydropower developer.
Possible solutions
In order to overcome the challenges faced by the hydropower developer, there is an urgent need to remove impediments in the expeditious development of hydropower projects. For example, the existing procedure of obtaining various clearances is cumbersome and time-consuming, especially when it comes to environmental and forest clearance. Land acquisition is another area of concern that needs to be addressed by state governments. It takes about two-three years for the land acquisition process; this needs to be reduced. The rehabilitation and resettlement of the project-affected people is another area where extensive cooperation and support from the state government is required for the smooth and timely implementation of the project.
It is necessary to maintain a favourable law and order situation to provide an enabling work environment for the uninterrupted execution of the project. It would also be worthwhile considering the development of basic infrastructural facilities such as road connectivity, communication, etc, by the state government, which would attract investment and help in the expeditious implementation of hydropower projects located in logistically difficult areas. In view of the critical role of state governments in the successful implementation of hydro-projects, it would be a good idea to make them stakeholders and partners in project development through the joint venture route.
Resolving inter-state issues involving co-riparian states is another area where Central government intervention would be very helpful in implementing projects involving water-sharing issues. Water being a national asset, evolving a broad consensus on shifting water from the state list to the concurrent list through a Constitutional amendment is another possible solution. In order to improve the availability of long-term finance at lower rates of interest, it would be worthwhile to consider enhancing the exposure limit of lending institutions for enhanced credit flow to the hydro-sector.
As far as the role of the developer is concerned, more emphasis has to be laid on extensive surveying and investigation so as to minimise the risk of uncertainties during execution. Improving project management, upgrading the technology and adoption of the best practices in project execution are some of the suggestions for mitigating challenges. Greater sensitivity towards environmental issues and their compliance, effective implementation of the R&R policy, and improving communication with the locals and project-affected families (PAFs) to make them partners in progress through a shared vision would be helpful in the smooth execution of hydro-projects.
The development of trained and skilled manpower through structured training programmes at reputed institutions and the development of ITIs for re-training and imparting technical skills to locals and PAFs would go a long way in providing employment and enhancing the availability of trained manpower. Planned and systematic development of vendors and suppliers, and providing opportunities for expanding capabilities among contractors for taking up the daunting tasks related to the hydro-sector would help mitigate the dearth of competent contracting agencies.
Hydropower projects bring development and prosperity to the entire region and deserve a special status to attract investment. Focused attention and a coordinated strategy to deal with the diverse and complex issues related to hydropower would go a long way in harnessing the remaining hydro-potential at a fast pace.
The author is CMD, NHPC Limited
