Kashmir’s First Private Power Producer

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Muddasar Mir did his MBA from Fordham University in New York in 2003 and flew back to take over the Magpie Hydel Construction Operation Industry Pvt Ltd that his father had set up in 1969. Haroon Mirani reports

Mudasir Mir

Six years later, Chief Minister Omar Abdullah drove to remote Bandipora to inaugurate the Athwatoo Small Hydel Project (ASHP), Kashmir’s first small project set up in the private sector. Supposed to set up a station with 7.5 MW, Mir opted for a fresh survey and it ended up with a capacity of 10 MW.

Financed by J&K Bank, Mir arranged machinery from France and the manpower from Bunkoot hamlet to create region’s most modern small project. Designed to be operated by a single person from a 12-inch finger touchscreen, it is fitted with SCADA (Supervisory Control and Data Acquisition) system for the purpose of remote-controlled operation through the internet. French companies Mecamidi and Zemberlan were engaged for the electrical part, Leroy Somer supplied generators and another French company Gena Electric was hired for commissioning it. It cost Rs 77 crore  Though capable of generating 60 million units of energy, the ASHP is producing only half of it for lack of adequate transmission.

At Athwatoo, only 18 trees were axed and only six houses relocated to lay 3.10 km long canal. They preferred laying huge pipes rather than digging canals at the cost of the fragile ecology of the picturesque region. Finally, they applied under clean energy mechanism (CDM) and hope to get paid for 35000 carbon credits.

The company has two other projects in hand – one in Tangmarg and another in Poonch, which will take Rs 275 crore investment. Tangmarg was supposed to generate 6- but a new survey by Magpie upgraded its potential to 10. The Poonch project was supposed to create 2.5 MW but its potential jumped to15  after a technical review. Tangmarg is about to be commissioned.

Venturing jointly into Chenab valley.

To tap the hydroelectric potential of Chenab, the state has entered into a joint venture with NHPC and NTPC for implementing three projects with a combined capacity of 2120 MW. A Kashmir Life report.

Conceived in 2007, a planner in J&K government wanted four Chenab basin projects to be executed in such a way that implementation is comparatively fast, has a better share of generations and jobs for the state, offers better exposure to the state’s engineers and minimize the equity requirement from state coffers. The major issue that factored in was the paltry Rs 8000 crore allocation in the eleventh plan against surging requirements at Baglihar and the upcoming Sawalkote. The ideal option was to have some kind of formal relationship with either of the two power utilities – NHPC and NTPC. Initially, four projects were identified to be taken up under the proposed Joint Venture (JV) – Kiru, Kawar, Ratle and Shamnot, DPR preparation of which were given to NHPC in October 2004. Within days, the authorities deleted Shamnot from the list because the 370 MW project was technically challenging and economically unviable and would submerge a vast stretch of the national highway beside some major habitations.

After initial negotiations with NHPC were positive, J&K initially wanted to retain 25% in the JV. However, NHPC showcased its JV with Madhya Pradesh in which the state held 49% equity. Then negotiations were revolving around 600 MW Kiru only.  Draft MoU was ready but was not signed in April 2008 when Prime Minister Dr Manmohan Singh visited NHPC’s DulHasti project in Kishtwar. By then, 1000 MW Pakal Dul had replaced Ratle and the JV was about three projects including 600 MW Kiru and 520 MW Kawar. Both the sides had agreed to the systems that would be in place in the JV. These included a 12-member board, a chairman from PDC, and MD from NHPC. J&K Bank was to be the preferred banker and most of the human resource was to be taken from J&K.

By May 2008, the union law ministry objected to various clauses of the draft MoU. Clause-IV of the draft MoU suggested that entire staff required for rehabilitation and resettlement activities shall go on deputation from state government as eighty per cent of group C&D staff would be J&K’s permanent residents. One-third of the group A&B staff would be from NHPC and PDC strictly as per their equity participation. Union Law and Power ministries suggested that since 51% of the equity is with a CPSU, the JV would be governed by the norms for CPSUs. This would not fetch J&K what it wants.  In the second stage of negotiations, the state wanted half of the equity but it would not alter the status of the company and would still stay as CPSU. Finally, the two sides agreed to get a third party that will retain 2% as the balance equity would be shared equally. NTPC, another CPSU came into the picture and agreed to the setup. The shareholding suggests that PDC cannot have more than 49% as NHPC and NTPC cannot have less than 49% and 2% respectively.

Finally, on October 10, 2008, when the Prime Minister formally inaugurated 450 MW Baglihar, the MoU was signed and Chenab Valley Power Projects (CVPP) came into being. In presence of Power Minister Jairam Ramesh and J&K Governor’s adviser C Phunsog, the tripartite MoU was signed by CMD NHPC S K Garg, CMD PTC T N Thakur and MD PDC Shant Manu.

Jobs apart, the system for sharing generation listed in the MoU suggested that 13 per cent of generations by the projects would come to J&K as royalty. Of the balance generation it will get 49 per cent on the rate to be decided by the Central Electricity Authority (CEA) and for the remaining energy, it will have the first right to refuse. JV would retain the project on BOOM basis. Financial closure would be on basis of thirty per cent equity and balance debt with state-owned J&K Bank going to be the most preferred bank. The JV led to the return of the Pakal Dul project to the state after many years of being handed over to the NHPC for implementation in 2002.

The three projects (2120 MW) have almost identical design envisaging rock-filled dams, underground powerhouses and tunnels. The bus bar per unit generation cost in case of Kawar is expected to be Rs 2.41, in case of Kiru Rs 1.41 and Rs 3.19 for Pakal Dul, according to NHPC DPRs at the 2006 price level. Unlike Pakal Dul, Kiru and Kawar are yet to be cleared by the Permanent Indus Commission.  In June 2011, the state government appointed Mohammad Yousuf Khan as the CVPP chairman. “The projects must be operational by 2018,” he told a news conference. “We are in the process of appointing a consultant.” It has already floated tenders for implementation of Pakal Dul.

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