NHPC In Focus

India’s hydropower giant NHPC is again under spotlight. While the International Court of Arbitration (ICA) at the Hague has barred it to raise any permanent structure, like a dam, for its project in Gurez, a civil society group in Srinagar has expressly proved the corporation has no ownership documents to claim Salal as its property, a Kashmir Life report.

International community, it seems, has evolved a novel idea of managing India and Pakistan in their water disputes. Last time World Bank appointed Neutral Expert (NE), Professor Raymond Lafitte, who deliberated over the ‘differences’ between Islamabad and New Delhi over the J&K government owned Baglihar power project gave a verdict that helped both countries claim victory.

Last week, The Hague based International Court of Arbitration (ICA) that was appointed by the World Bank to tackle the ‘dispute’ between the two countries over the 330-MW Kishanganga Power Project has also issued an interim order that is apparently a win-win for both the countries.

Islamabad says the ICA has stayed construction of the dam by preventing NHPC from creating any permanent structure on the riverbed. New Delhi is saying that the court has permitted it to go ahead on almost everything that makes the project barring any permanent structure, which will neither impact the schedule of the project nor its design. Again a win-win condition till the ICA comes up with its final verdict within a year or so.

Islamabad has serious issues over Kishanganga project that is aimed at storing the water of Neelum (Kishanganga) in Gurez and then diverting it to Bandipore through tunnels to generate electricity. The water from the tributary of Jhelum will actually get diverted into the Madhumati and finally into Wullar lake.

The two countries had a series of meetings but they failed to agree on a way out. In fact, New Delhi was prompt in addressing the concerns of the Gurez residents and reduced the height of the dam to reduce the scale of displacements but it did not oblige Pakistan that has been claiming the project will have much larger impact on its side of Kashmir. Finally, Islamabad approached the World Bank in May 2010 and the ICA was set up at The Hague. Stephen M Schwebel, an American jurist, leads the ICA.

Pakistan claims the inter-tributary transfer is not permitted in the water sharing Indus Water Treaty and the diversion will force a shift in crop pattern in PaK besides limiting the energy output of the 969-MW Neelum-Jhelum project that it is building downstream. All the members of the ICA visited both the spots in June taking the trans-LoC route. Both the countries are apparently in race to finish the project first because it would help getting an ICA award against the one that is incomplete.

Soon after the ICA was set up, Pakistan moved an application seeking a stay on the implementation of the 330-MW Kishanganga project in Gurez near the LoC. Islamabad was not obliged immediately, Instead, Schwebel led his seven-member team first to PaK where they visited the site of Neelum Jhelum project and then they drove in through Jhelum Valley Road and reached Uri. They flew to Bandipore and Gurez in June. Attorneys from both the countries accompanied the ICA to the sites on both sides of the divide. They issued a voluminous verdict last week.

India, as per the interim order, can “continue with all works” related to the project except “any permanent work on the riverbed that may inhibit restoration of the river’s full flow”. The court says the interim measures were necessary in order to “avoid prejudice to the final solution” for the dispute.

According to the interim order, NHPC can “proceed with the construction of the sub-surface foundations” of the dam, “erect temporary cofferdams and operate the by-pass tunnel it has said to have completed”, “temporarily dry out the riverbed of the Kishanganga-Neelum at the Gurez valley” and “excavate the riverbed.” It can also “utilise the temporary diversion tunnel it is said to have completed at the Gurez site, and may construct and complete temporary cofferdams to permit the operation of the temporary diversion tunnel.”

The only relief ICA has given to Islamabad is that no permanent structures could be raised on the Indian side. The court has directed joint inspection by the experts from two countries to ensure the order is implemented on ground.
The order is interesting and offers almost a win-win status to both sides. While Pakistan has started claiming that it is the ‘beginning of the victory’, NHPC officials talking off the record see the order actually not preventing anything other than the construction of dam.

“It would not even impact the schedule of its completion,” a senior officer privy to the developments said. Initially there was euphoria of victory in the Pakistani media but it soon died as certain newspapers started questioning the government initiated victory claims.

Same is the case in New Delhi as well. It continues to maintain victorious stance on the issue but some experts see the order dicey. Halt in the construction of the dam is the real major issue that makes all other investment risky. If the entire project gets ready and then the ICA favours Islamabad, it will be a clear loss of thousand of crores of rupees. Both the countries are actually studying the voluminous order in fine detail.

Hindustan Construction Company (HCC) is an implementation agency of the project and so far four kilometres of the tunnel from the two sides stands completed. Officials in NHPC said the project would cost Rs 3642 crores (an upgrade from earlier Rs 3316 crores) and by the end of June, they have already booked an expenditure of Rs 557.96 crores.

In Srinagar, where energy is at the core of the public discourse, NHPC is facing music for altogether different reasons. A civil society group led by industry lobbyist Shakeel Qalander had gone to the court accusing the hydro power giant of exploiting water resources of the state illegally. He had taken the minutes of various state cabinet meetings as the final state position and knocked at the doors of the court for justice on the economic issue.

The court disposed off the petition with a direction that the centre and state governments would cooperate with the petitioners in getting to the bottom of the issue. The group approached the state and the central government, besides the NHPC, seeking information under the RTI act. While the state government gave whatever information it had, the central power ministry washed its hands off by passing the buck on to the NHPC. The hydropower major did not offer anything but the group got hold of a communication the corporation had sent to the state government.

Pertaining to the 690-MW Salal Power Project, the communication informs the state government that it lacks copy of any agreement that might have been reached with the state government regarding sharing of power or return of the power project to the state. The central power ministry, it says, transferred the project to the NHPC including the land and the movable and immovable assets on it in November 1987 on ownership basis. It also referred to a central government letter suggesting “The government of India being a sovereign authority, execution of legal documents for transfer of the Salal Project, already belonging to the Government of India, to NHPC is not considered necessary as the company is wholly owned by Government of India itself.”

Qalander says the contents of the letter are against law of the land and blatantly illegal. “I hope the assembly currently in session debates the issue well before it could trigger law and order problems,” he told reporters at a news conference. While land has remained a highly emotive issue in Kashmir, state legal provisions permit transfer to the central government utilities after J&K Transfer of Property Act is adequately amended. The last time it was amended was while managing the financial closure of the Baglihar power project. Status quo ante was restored in the TPA within a year later.

The state government, in its response to the RTI has offered its communication to the centre but has categorically stated that it lacks any agreement in its records about Salal, Dul Hasti and the Uri power projects. The final agreement that the state government had sent to the centre would fetch J&K 1.5 paisa per unit of electricity generated besides 80 MWs of power from its first stage. Almost the same condition was applied in Uri and Dul Hasti with the former having the provision of being bought back by the state government.

Provisions listed in these draft agreements, sent to the central government, are at variance with the status quo of the relationship. J&K’s benefits are restricted to an outright 12 percent royalty in generations of the three NHPC projects. Interestingly, these three projects are the major powerhouse of the NHPC in J&K. In the last fiscal ending March 2011, its operational projects in J&K contributed more than 47 percent to NHPC’s cumulative generations.
“Ideally the lawmakers should debate the issue and tell the society what went wrong and how it can be rectified,” Qalander said. “If we could not get any solace from there, we will approach the court again.”

Some of the lawmakers seem to have taken the advice seriously. “I have already moved a motion seeking a debate on the NHPC issue in the assembly,” CPI (M) lawmaker Mohammad Yousuf Tarigami said. “Let us see what happens.”

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