Powering Kashmir

BILAL HUSSAIN

Passing of the Jammu and Kashmir Water Resources (Regulation and Management) Bill by the Assembly to charge National Hydro Electric Power Corporation (NHPC) and state-owned power companies for harnessing the state’s water resources for power generation is expected to go a long way in strengthening the power sector, provided the money realized is invested in the energy sector.

The need for the bill could be realised by gigantic annual revenues of these companies from the state. According to an estimate by the state government, NHPC and state-owned companies generate over Rs 7,140 crore annually from different hydroelectric projects operating in the state. The bill would ensure that the companies are charged two paisa per cubic meter of water used for power generation. It is estimated that at present the volume of water present in the state is roughly about one lakh million acre feet, out of which 33,930 million cubic of water is used by the companies for electricity generation.

Getting the bill through the Assembly was no big deal. However, sustained implementation is. After convincing the hydropower companies to pay for water usage, the state administration has finally managed some bucks from them. Recently, minister for PHE, irrigation and flood control, Taj Mohi-ud-Din, said on record that with this initiative the state would get an amount of Rs 948 crore annually, of which Rs 200 crore have already been received as water tax.

Deficits in power sector

The revenue deficit in the power sector of the state is expected to cross Rs 1,800 crore this fiscal. The Power Development Department (PDD), in its annual requirement program has estimated purchase cost at Rs 2,944 crore and revenue at Rs 1,136 crore, which means a deficit of about
Rs 1,808 crore.

The ever widening gap in the revenue and power purchase is mainly because of the PDD’s failure to collect dues from consumers, including government offices and troopers as well. The dismal performance in revenue realisation in many electric divisions particularly Circle-II excluding Bandipora, Circle Pulwama and Circle Bijbehara, should be matter of concern for the concerned officials.

Past figures on power import show how drastically it is increasing. In 2006-07, imports stood at Rs 1500 crore, in 2008-09, it was Rs 2000 crore, in 2009-10 about Rs 2,560.95 crore and in the last fiscal, it was Rs 2,767.04 crore. On the revenue front, the performance is equally dismal. In 2008-09, the revenue realised was Rs 628 crore, in 2009-10 it was Rs 702 crore and last year it stood at Rs 794.92 crore.

Tariff hike

The PDD has proposed a hike by 65 per cent for all categories of industrial consumers, which evoked an immediate denouncement by the industrialists of the valley. The power tariff had been substantially increased only the previous year, they said, so there was no logic in increasing the tariff this year. The proposed tariff hike is so steep that it would cripple the already ailing industry in the valley.

T&D losses

The sector has not only failed in power generation in the but is also unable to tide over the huge transmission and distribution (T&D) losses. Despite guidelines from Central Electricity Regulatory Commission, the state government has failed to bring these losses down by three percent annually. The T&D losses were 67.50 percent in 2006-07, 61.90 percent in 2007-08, 61.31 per cent in 2008-09, 62.06 percent in 2009-10, 60.99 percent in 2010-11 and stand at around 59.72 percent in the current fiscal.

The PDD has not been able to reduce its transmission and distribution losses over the years. Industrialist claim the department in its distribution petition to the state electricity regulatory authority has projected a 1.27 per cent reduction in T&D losses during the year 2011-12 although billions of rupees are spent year after year on power reforms and infrastructure development. The T&D losses are still proposed to be as high as 59.72%, against average T&D losses of 25% at all India level.

Outsourcing management services

The Comptroller and Auditor General (CAG) in its its audit report for the year 2009-10 mentioned that the state government has paid Rs 51.58 crore up to May 2010 to NHPC for the operation and maintenance of the Baghliar power project, putting a question mark on the efficacy and planning of the Jammu and Kashmir State Power Development Corporation (JKSPDC), established with the purpose of running the state-owned power projects. CAG in its report said that due to the non-availability of the trained manpower, JKSPDC in March 2009 engaged NHPC for operation and maintenance of Baghliar power project at a whopping cost of Rs 74.10 crore for the first year with annual escalation thereafter as permissible under Central Electricity Regulatory Commission (CERC) guidelines.

CAG has also picked holes in the manner JKSPDC wasted nearly Rs 4.62 crore for training six engineers in Germany, whose services has not been utilized till date. Worth mentioning that JKSPDC had total sanctioned staff strength of 5067 during the 2009-10 but the actual manpower working on the ground was merely 3331, thereport said adding that the Corporation incurred an expenditure of Rs 62.94 crore on the salaries of its staff during the year.

Transfer of power projects

While the bill is yet to receive annual expected amount, the state government has initiated the process to seek return of six power projects from NHPC, which according to reports has reached between the state and the union power ministry in 2000 under a Memorandum of Understanding.
The projects which the state is reclaiming are: 280-MW Uri-II (Baramulla), 330-MW Kishanganga (Bandipora), 1020 MW Bursar (Kishtwar), 120-MW Sewa-II (Kathua)), 45-MW Chutak (Kargil) and 44-MW Nimo Bazgo (Leh).

While, the State Finance Commission (SFC) has also recommended transfer of Dulhasti hydro power project and Bursar storage scheme from NHPC to the state. Earlier, the Prime Minister’s Task Force on Economic Development of Jammu and Kashmir constituted in 2005 which was headed by former RBI governor C Rangarajan had also recommended transfer of Dulhasti HEP to the state.

Power Sharing

The SFC in one of the recommendations has asked the state government to take up the matter of increase in power sharing from the central projects operational in the state. At present, the state gets 12 percent of the free power from projects run by NHPC in the state.

The NHPC is managing four power projects in J&K—Uri-I, Salal, Dulhasti and Sewa-II with combined power generation capacity of 1660 MWs. Besides, it is going to commission over seven power projects in near future, some of them in joint venture with the State government. Had the politicians and policy makers ever been concerned about the water resources, the economic landscape of the state would have been different than what we are seeing. The state wouldn't be faced with problems like power deficits and unemployment, to mention a few. Without wasting further time, the concerned officials should wake up and take corrective measures to put things in place.