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| Technocrat punctures demand for power projects | | Says it will be a liability | | Early Times Report
srinagar, Mar 22: Finally, a word from technocrat on Tuesday left Kashmir's civil society red-faced over latter's demand seeking return of power projects from the National Hydro Power Project (NHPC) to the State.
Prominent civil engineer Iftikhar Drabu, who has worked on some of the major hydro power projects in India and China has snubbed the voices, which had been seeking return of power projects like Salal, Uri and Dulhasti to the State’s kitty. He said such a demand would not benefit the State but could actually end up as liability.
The technical observation has come at a time when apart from a civil society groups, People Democratic Party (PDP) has been looking ahead for return of hydel projects as CBM from the Central Government formation.
"There is a big misconception that once hydro power projects from NHPC are returned, the State Government will be cash rich and that it will herald a new dawn of prosperity for the State where people will no longer have to work but will be able to live off the profits from these projects," Drabu said, in his technical-paper published in a Srinagar-based daily.
Laced with facts and figures, Drabu said "This misconception is presumably based on their incorrect understanding that currently NHPC sells the energy it generates on a monopolistic basis thereby making huge profits. From this follows the demand that JKSPDC replace NHPC as owner of these projects so that the State Government get these profits in its coffers. The fact of the matter is that the energy tariff is determined through a due regulatory process to ensure its competitiveness. I do not believe there will be any change in the fortunes of the State post return of these projects."
He added "On the other hand I seriously apprehend that we could be worse off post their return."
Drabu said it would be economically unfeasible for the State to run these projects as most of them have almost outlived their life.
In his typical sarcastic style, Drabu said, "There is no reason to believe there will be any change in the flow in the river, pre and post transfer, and given the way the tariff is determined the revenue will also remain the same."
"So then where will the windfall that we are expecting post transfer of these projects come from? Where will we get these huge profits that we currently believe are being taken away by NHPC?" he asked.
Drabu's observation took social media by storm even as the technical paper went viral on websites like Facebook and Twitter with many appreciating his path-breaking observations.
Call it fate or coincidence, the debate has erupted exactly at the time when the Peoples Democratic Party leaders seek return of power projects.
But this engineer, who has been associated with construction-majors like Scotwilson, has a point. "Given the costs and revenue will remain similar to what NHPC currently have on these projects and the rate of profit from these projects would be the same, i.e. 15.5% return on equity. This 15.5% return on equity is certainly not a windfall. I am sure there are numerous investment opportunities where the Government can invest and earn a higher yield. Since these are old projects their loans might have been liquidated and the value that State has to pay for these projects would be as equity only," he maintained.
"This 15.5% return on equity also carries its associated risks as the actual costs of operating and maintaining the plant could be higher than estimated and also the revenue could drop because of actual discharge in river being lower than estimated or the downtime on maintenance being higher than estimated," Drabu said.
"This likelihood of higher operating and maintenance costs is particularly relevant here since these plants have been operational for a number of years and as such their need for maintenance is going to be higher."
For the past around a decade a Srinagar-based Kashmir Centre for Social and Development Studies (KCSDS) had been demanding the return of power projects and even picked up the issue with successive Prime Ministers.
Talking to Early Times, the KCSDS, however, took a dig at Drabu's statement. "Nobody is naive or foolish. We stand by our demand for return of power projects like Salal, Uri and Dulhasti can fetch the State sustainable revenue of around Rs 4000 Cr annually," KCSDS member Syed Shakeel Qalandeer said. |
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