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Business EconomyPosted at: May 15 2016 9:24AM


Parl panel calls for handing hydel projects to PSUs as private players fail to make dent

New Delhi, May 15 (UNI) A House panel has called for ending the practice of upfront premium demanded by state governments for allocation of hydel projects so that hydro PSUs could get a level playing field vis-à-vis private developers who bagged majority of projects but unable to implement them.
“The Government should take necessary steps to discontinue the practice of payment of upfront premium for allocation of hydro projects,” said the Standing Committee on Energy in its recent report titled, “Hydropower: A Sustainable, Clean and Green Alternative.”
India has potential to install nearly 2.5 lakh MW hydropower generation capacity. Against that, it has harnessed about 43,000 MW only. Because of slow development of hydel projects, the share of hydropower projects has fallen to 15.2 per cent from 50.62 per cent in 1962-63.
Arunachal Pradesh, Sikkim, Himachal Pradesh and J&K account for the bulk of the country’s hydropower potential.
Private players like Reliance Power, Jindal Power and GMR Power have bagged a large number of projects allocated by Arunachal Pradesh and other states in the past decade but unable to execute them for lack of financing or due to other constraints.
NHPC has come forward to buy these stranded projects but it wants private developers to take a dent for the consummation of deal.
The panel has made the suggestion in the light of the fact that majority of hydel projects bagged by private players through payment of upfront premium remain have not taken off the ground. The reason is, private players lack technological expertise and are unable to arrange funding for allocated hydel projects, which are seen as risky by lenders.
On the other hand, PSUs do not have many projects to develop. Under existing law, they are not permitted to pay premium as regulators do not allow its recovery through tariff.
Because of this legal constraint, PSUs have kept away from participating in bidding for hydel projects. That is the reason they are now staring at empty project pipeline.
“It has become necessary to promote PSUs engaged in hydropower by allocating them more and more projects as they have the required infrastructure, expertise and resources to work in remote areas,” the panel recommended.
Besides, unlike private players, PSUs do not face many difficulties in arranging project finance, it noted.
The committee observed that performance of the private sector has not been up to the mark for various reasons and that they are not sure if thing will change for the better anytime soon. But on the other hand, it noted, the Government has giant PSUs like NHPC, NEEPCO, THDC which are specialized in the development of hydro power but do not have many projects to develop.
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