The 12 MW Athwatoo Hydro Power Project commissioned last week marks the beginning of private sector’s venture into J&K’s small power projects. Built by a Kashmiri entrepreneur, the project shatters many myths and throws up immense possibilities of empowering Kashmir by harvesting its water resources. HAROON MIRANI reports from Athwatoo in Bandipore.
What can a baker, a labourer, a shopkeeper, a terminated PDD lineman, a septuagenarian and a blacksmith have to do in a power project? Apparently, some errands and menial jobs. But not under Nazir Mir, managing director of M$ Civil Engineering and Constructions, who led this rag tag of unlikely professionals to build and run state’s most sophisticated powerhouse – Athwatoo Small Hydel Project (ASHP).
For a state that handed over the maintenance of Baglihar Power Project to NHPC at a heavy price for “lack of expertise”, Athwatoo is a whiff of fresh air. Here local manpower has got hands on to modern technology, of course with expert guidance. But that is not the project is all about.
ASHP is the first power project in J&K built in the private sector by a Kashmiri entrepreneur. It is eco-friendly, state of the art has been completed within the stipulated time span, and can be operated smoothly from a small finger touchscreen.
In a place known for cost overruns and inordinate delays, the sleek 12 MW project constructed at a cost of 77 crore rupees was commissioned this week. While the capacity is limited, the success of the power project is a landmark in Kashmir’s energy sector. Though the project harnesses only 12 out of the estimated 16,500 MW hydropower capacity in Jammu and Kashmir, it has been completed much ahead of similar projects taken up in the state. The breakthrough technology that the project uses is paving way for doing away with many synchronisation hassles. Above all, it has dispelled the myth that J&K based investors lack entrepreneurship and depend on subsidy and tax exemptions.
Ms Civil Engineering and Constructions had created a special purpose vehicle, Magpie Hydel Construction Operation Industry Pvt Ltd, to bid for the project located on Gurez Road near Bankoot in the picturesque mountains of Bandipora. The project was kept under wraps for four years, right from the time its foundation stone was laid.
“We decided against any publicity as there have been a lot of instances where mega projects had gone bust after their grand stone laying ceremony,” said Muddasar Mir, the 31-year-old director of M$ Civil Engineers and Constructions.
The project was a challenge all along. “Only a site was identified, nothing else. Not even an approach road,” recalls Muddasar. The company had to lay new roads to reach to the site.
A full year was lost in securing clearance from different agencies and land acquisition. After that, the project was completed in 33 months. The Jammu Kashmir Power Development Corporation (PDC) had estimated the power potential of the project as 7.5 MW. Sensing discrepancy, Magpie conducted a fresh survey of the project and found its potential to be 12 MW.
“We got the survey done by a known expert Nishakar Mishra of Water Power Consultancy and were glad to see its enhanced potential,” said Muddasar.
Muddasar had returned to join his family business in 2003 after completing MBA from Fordham University New York. After a stint at their hotel in Tangmarg, Muddasar found himself engaged in power sector after their company won the tender to built the Athwatoo powerhouse.
Their company had a 40-year-experience in the construction business. They had taken up civil works in power projects like Upper Jhelum, Lower Jhelum, Karnah, Drass and Pahalgam. But Athwatoo was a big plunge for M$ company and everybody advised against it. Muddasar says he too was apprehensive at first. His father, Nazir Mir’s determination got him started. But there were a lot of odds. “There were no roads, no buyers in sight, no arrangement of finance in sight, the area did not have any basic facilities. The cost overrun and delay could make it a disaster, but we decided come what may the powerhouse has to be constructed,” said Muddasar.
Their resolution led them to rope in J&K Bank as a financier. “After deliberations, we told them that whether or not you give us money, we will still build the project,” says Muddasar.
The bank had a bitter experience with Baghlihar power project and was hence reluctant to lend money to the power sector. “It was after Chairman Haseeb Drabu saw our commitment that he agreed.”
The project envisaged construction of a 3.1 km canal, 450-metre pent stock, 550-metre spillway and 10 X 18-metre main powerhouse. A 7km transmission was also laid to transfer the power from the project to the grid.
While harnessing a natural resource, the project kick-started economic development of the backward area. It involved over 3 lakh man-days of labour for its completion. Of the required man days, 2.75 lakh came from the locals. A skilled component of 35000 came from outside the state.
The infrastructure laid for the project came handy for the people too. “We let roads and canal free for people’s use too,” said Muddasar. Currently, the ASHP employs 75 people, all locals, including engineers, the blacksmith turned head mechanic, electricians and security guards. It uses imported machinery and technology, primarily from France. “Actually it is based on the model of single man operated powerhouse and it has the provision of being operated from the internet too,” said Muddasar. ASHP is fitted with SCADA (Supervisory Control and Data Acquisition) system for the purpose of remote-controlled operation. However, the company has not put the controls on the internet due to the fear of hacking, although it has installed VSAT for the purpose.
A sleek 12-inch finger touchscreen displays all the working parameters of the project. “With a couple of clicks, you can start the project, increase or decrease the generation capacity, control the water flow and so on,” Bilal Ahmad, Electrician at the project said. Prior to his appointment at ASHP, Bilal ran a shop in his locality.
The project shutdowns automatically in extreme situations. “It is a fully automatic powerhouse which has no rival in the entire state,” Bilal said. It was a big challenge to transport huge machinery, like 30-tonne generators to this place. At Jawahar tunnel, the hydraulic truck had to reduce its height to the bare minimum to squeeze through the tunnel. For crossing rivers at Bandipore and Sopore, the truck had to ply through the water as the bridges would not support the weight. At Bonkoot, the fifty feet truck had to manoeuvre through small roads escorted by a couple of bulldozers. “It took us 20 days to transport the machine safely.”
Automatic voltage regulator
In the final phase of its construction, Magpie faced one of its biggest challenges. “The power produced by the project couldn’t be properly transferred to the consumer as the grid could not support the voltage,” said Muddasar.
The company consulted a number of specialists from India and Europe, but none had the answers. “Some Indian experts told us to either shut the project during grid fluctuations or operate in isolation mode,” said Muddasar. “They said the loss is inevitable and there is no solution to it.”
Luckily for the company, two visiting French engineers – Pascal Griere and Simon Griere – had worked on similar problems in nuclear power plants of 2000 MW capacity. “It was by God’s grace that the two engineers came for commissioning of generators. They knew the solution to this complex problem of the variable grid,” said Muddasar.
The engineers installed a system by virtue of which the production parameters respond to changes of the receiving grid. “If there is voltage fluctuation in the grid, our system synchronises the power supply accordingly, without shutting down or loss of power,” says Muddasar. The system also enables connectivity with the grid at low voltages. This is one of the first such systems in operation in entire India and can become a norm for future projects.
In Pahalgam hydel project, the same problem confronted the management. The management had decided to run in isolation mode and then supply directly to consumers, bypassing the fluctuating grid.
Indus Water Treaty
ASHP is run of the river type and it has been cleared under the provisions of Indus water treaty. The report for the run of the river project was submitted to Indus Water Commission India and they subsequently got it cleared from their Pakistani counterparts. The project is constructed on fast flowing Madhumati river which originates in Harmukh mountain ranges and ultimately reaches Wullar.
The project uses water below the mandatory 300 cusecs for generating electricity. The canal can hold the water for three minutes of the running of the turbines.
The project is expected to generate an average of sixty million units per year. Currently, JKPDD procures electricity from ASHP, which they receive at their grid in Bandipora. The power consumption of Bandipora is 10 MW and ASHP can easily suffice their needs.
The efficiency of PDD’s receiving end is no match to the technology of ASHP. At times, the 33KV supply line of the grid turns out to be just 24 KV resulting in losses to ASHP. The line is also down at times resulting in zero transfer of electricity.
Meanwhile, Hindustan Construction Company building the nearby Kishenganga power project has sought interest in purchasing power directly from ASHP. “They have expressed their interest as they think ours is more reliable than the state grid,” said Mir.
According to the original agreement, the project has to be transferred back to state government after 40 years that also includes construction time. While confirming the agreement, Muddasar says, “Yes, the project will be state’s property after 40 years and I don’t think there is anything wrong in it.”
“Of course we are not NHPC, we will return it,” he remarks.
A number of foreign companies were involved in the construction of this project. Mecamidi and Zemberlan from France were involved in electrical part, Leroy Somer for supplying generators and Gena Electric France for commissioning the project. Civil works were done by M$ itself.
Six engineers employed in the project were trained by French engineers. Expert engineers worked at the project site for months together to make the project completely problem free.
Most of the employees of ASHP had no previous experience of working in such projects or conditions. But ASHP imparted required skill to locals. For recruitments, hard work was the preferred criterion. “We have trained all kinds of people from blacksmiths to terminated lineman in latest technology with ease,” said Muddasar.
The company has taken due care of the environment while constructing the project. “We designed the project is such a way that it causes minimal damage to the environment,” said Mir. The company had to cut just 18 trees for the construction of 3.1 km canal and only six houses had to be relocated.
The company used 630 metres of pipes instead of digging canal so as to save trees in the forest area. There are also plans of taking up afforestation in the vicinity.
Being an eco-friendly power project, ASHP is eligible for carbon credits. The company has hired the services of CantorCO2 for taking up the case. “We are expecting the carbon credits in the next 8-12 months,” said Muddasar. The company expects around 35000 carbon credits for their project, which will be an added income to it. ASHP project is also expected to receive various incentives granted under different schemes. Magpie has two more projects in hand. The 10 MW Tangmarg project and the 15 MW Poonch project are expected to be completed in next three to four years. Poonch project which was tendered for 4 MW has been designed by Magpie for generating 15 MW electricity. The only hurdle is that the state has not transferred land to the project as yet.
Muddasar says the project would not have been completed without the support of his family. “At times we had to camp for months at Bandipora, but nobody at home complained,” says Mir.
Red tape holds IPP flights
After Magpie created a benchmark in setting up a small power project in the private sector in shortest possible time, tongues are now wagging to seek answers for many vital questions. While ten small power projects were allotted for execution in 2003, people are asking about the fate of nine others – of which, interestingly two are with the Magpie, the promoters of the Athwathoo Hydro Power Project (AHPP).
The power sector was thrown open to private parties in J&K only in 2003 under a revised policy. By then J&K Power Development Corporation (PDC) had identified 44 small and micro power projects and completed the survey in 29 others. In the first go, 10 were allotted after open bidding to the highest bidder (two lakh Rupees per MW) on built, operate, own and transfer (BOOT) basis.
With an aggregate installed capacity of 59.2 MWs (which has hanged after the entrepreneurs reassessed the potential and increased the capacity as was the case in ASHP), these small projects were supposed to trigger an investment of Rs 413 crores in energy-starved remote and backward belts – three in Jammu and seven in Kashmir. For the ten projects, two firms are from outside, four are Srinagar based, two are Jammu based and the remaining two are joint ventures between state units and outsiders. Magpie Hydels, a Srinagar based company that had been associated directly with the setting up of at least three projects in the state has bagged three of the ten projects.
The 2003 policy, under which these 10 projects were allotted, separated the projects on the table in two categories – below 25 MWs and above 25 MWs. Though identical policies with similar principles and basic guidelines are in place, it is grid interfacing, transmission, banking, royalty and time limit for completion of the projects that distinguish the two.
Both the categories are treated as industry enabling them to get the incentives available to industrial units in backward areas including toll tax and GST exemptions and no income tax.
As a policy, for the first five years, no royalty shall be charged for projects with installed capacity of more than 25 MW. For the next decade, the royalty shall be charged at the rate of 15 per cent of net energy wheeled or supplied. After 15 years of operation, it will increase to 18 per cent. However, for projects of less than 25 MW, royalty has been exempted for the first 15 years of operation. In case of sale to other parties or to PDD after 15 years, 12 per cent royalty shall be charged. No entry tax would be levied on power generation equipment and building material required for projects.
The investors will own the project for four decades and then return it to the state government. Independent Power Producers (IPP) prepare DPRs within two years of allotment and complete the project in four years. It was under this policy that PDC in 2005 again sought bids for 25 mini projects with aggregate capacity of 133 MWs. As many as 19 agencies bid for 19 projects for a total of 123.85 MWs.
Bids were evaluated but never allotted. In 2006, the government said the policy will be amended and Independent Power Producers (IPP) would have to complete the projects within 60 months of allotment rather than 90 months. Issues about paying “take over costs” after 40 years without having any formal and recorded periodic check system of the plant were also discussed. But it never went beyond that point. Many thought royalty issue was paramount ignoring the wheeling costs that IPPs are supposed to pay.
Now a new policy is in making. A committee has been constituted under economic adviser Jalil Ahmad Khan. It is yet to meet. The idea, this time, is to rope in Dr Farooq Abdullah and get his ministry to pay for preparing DPRs so that the process of executing the projects becomes easy and fast.
But the lackadaisical attitude has cost the state dearly. Barring ASHP, most of the projects are marred in red-tapism. In some cases, forest department clearance is awaited and in a few state government is unwilling to transfer land. Only two projects – one at Brenwar Budgam of 5 MW and another one of 15 MW capacity at Doda Jammu – are likely to be completed in near future. Industry insiders say the Budgam project is undergoing finishing touches and is expected to be commissioned in the next couple of months.
A 4 MW project being set up by Ruby Rehbar at Kupwara has been marred for environmental clearance. Now its file has been re-submitted to the cabinet. The work on the Boniyar project and another project in Doda is going slow due to a number of reasons. Aharbal project that was supposed to be set up by Jayprakash Associates – the company set up the Baglihar project – is abandoned for reasons of environment and tourism.
But many in the industry say that while the government drafts a new policy it would be good to take lessons from other states especially Uttrakhand where entrepreneurs are free to identify a project and seek allotment for execution. Is our policy making coterie ready?