Baglihar slips into NHPC hands

Water abundant but power deficit J&K commissioned its flagship Baglihar project after fighting many ‘wars’ against nature, Pakistan, and a discouraging system. As generation started, PDC signed a 2-year O&M contract with NHPC, the hydropower giant which in Kashmir is accused of exploitation. R S Gull investigates the anti-climax that corporation insiders say is “more a loss of face than money”.

Technically, Baglihar is owned by PDC, a wholly owned subsidiary of J&K government.
Technically, Baglihar is owned by PDC, a wholly owned subsidiary of J&K government.

Long accused of exploiting J&K’s water resources, NHPC has now taken over Baglihar as well. Yes, India’s hydropower giant has actually entered into an O&M (operation and maintenance) agreement with state-owned Power Development Corporation (PDC) on March 31 under which it will run the project for two years at a whopping fee of 1.5 percent of the project cost plus taxes – amounting to Rs. 110 crores a year.

By now the NHPC must have taken over. But the new government’s first major decision taken in the 56th Board meeting of PDC was kept under the carpet till industry chieftain Shakeel Qalander leaked the ‘plot’. In election time, the agreement is likely to trigger another series of controversies over the project that remained dogged in crisis from the day it was conceived.

For signing the O&M contract with NHPC the government has taken into consideration the apparent PDC incapacity to handle the project. While outsourcing the O&M, it is alleged of having skipped a better and economic offer by other parties, thus making the decision fishy. In fact, German Voith Siemens that has been the electro-mechanical contractor of the project had offered its services at Rs. 36 crores a year. The offer was rejected. Interestingly, NHPC is subletting their contract to the same company contract now.

“It is not a matter of money. It is a loss of face,” a senior engineer, who wishes to remain anonymous, told Kashmir Life. “We knew that many forces are desperate to prove us incompetent but in this case successive governments in state helped vindicate them.”

Technically, Baglihar is owned by PDC, a wholly owned subsidiary of J&K government. It might have a huge army of workers – from engineers to finance mangers and clerks – but practically they are all borrowed, being sent on deputation from other departments almost at the fag end of their careers. Practically, PDC has only a couple of dozen employees of its own – a company secretary, few clerks, peons and drivers – while the rest are from other departments.

Processes envisage, says a senior engineer, sending required number of engineers to the site almost two years ahead of the completion of the project. Under every agreement, the contractors are supposed to train the owners about managing and operating the project. It is this skilled workforce that formally takes over when the commercial operations start. In case of Baglihar, the system was not followed.

“In the PDC board meetings since 2005, I have been insisting if this issue (of sending engineers to the site) is not tackled, it will create a major problem and an eventual embarrassment,” a former PDC member told Kashmir Life.
The Lahmeyer International, PDC consultants on Baglihar (a firm that has been black-listed by the World Bank) had in fact drafted a report in July 2004 on the staffing, training and allied issues.

They had suggested a requirement of 275 people but the PDC bosses later jacked it up to 398 after reviewing every requirement that may have arisen once the project was handed over. After consistent communication from PDC Board, a committee was finally set up on August 20, 2008 to identify and appoint 214 engineers excluding 14 supporting staff members. By September 7, 2008, 24 engineers were positioned and were being trained in the project but most of them came on deputation.

The process of identifying and recruiting was initiated and in case of engineers the interviews were conducted also. But the appointments were not made. Right now, only skeleton staff of around 50 people is stationed at the site working with the contractors.

In subsequent board meetings, the issue always cropped up. Chief Engineer (generation) informed the board that some engineers have been associated with the project from the start as staffers of M/S PES, a Hyderabad based firm to which M/S Voith Siemens – the EMC contractor – has outsourced its job. He had suggested that they be accommodated.

“When the issue of staff was raised, there were many offers. Even JP had made an offer but the best was from Voith Siemens. They had asked for three crore rupees a month for operating the project and agreed to train 16 engineers in handling the state of the art project by taking them on board,” a PDC insider said. M/S PES had offered to take over the maintenance part at a paltry sum. But the offer was not accepted and NHPC was roped in.

“It is not a simple issue. It is strange business. It is like a shopkeeper giving his keys to his competitor who sells the same items in the same market,” says a former engineer who has served at Baglihar. “It is more of a conspiracy involving many IAS officers and bureaucrats in centre and the state government.”

NHPC runs two projects on Chenab. Baglihar falls between them. The river discharge is gradually decreasing to the extent that PDC could run only one of the three units (150-MW each) during winters. “There is every possibility of NHPC maximizing its profits and we in between would be the losers,” says whistleblower Qalander on basis of the inputs he has from PDC. Interestingly, NHPC runs only Salal on its own as it has outsourced O&M of Dul Hasti to other party.

Between October and March, Baglihar-I (450-MW) generated energy worth Rs 300 crores. Barring Rs 26 Cr worth of energy that Power Trading Corporation (PTC) purchased, the rest was consumed locally. Now power deficit state’s flagship project will start debt servicing (by selling half of its generation to PTC at Rs 3.60/unit) from April but it will be NHPC that will offer PDC the final accounts of the project it built by begging, borrowing and literally stealing.

Admitting that the O&M contract was signed after duly approved by the Board, government spokesman said, “It is for limited period” and involves “Rs 74 crores for the first year” under CERC norms for operations and maintenance.

Explaining the decision, the spokesman said they had sought offers from different quarters. “The offers were examined by a high level committee of JKPDC which was of the view that all offers except that of NHPC were incomplete in terms of their scope. The offer of M/S Precision Engineering Services, which is a sub-contractor of Voith Siemens, was only in respect of power plant maintenance. Voith Siemens was only for operation and maintenance of the electro mechanical equipment and not civil structures, reservoir,” he said.


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