Short Circuit

A series of interventions in the Jammu and Kashmir’s energy sector remained unchallenged till the PDD employees claimed their status was getting compromised as the reforms, post-unbundling, flowed with a ferocious velocity, reports Masood Hussain

Watch the Fingers: The JKPEECC team led by Sachin Tickoo flashed the victory sign after the agreement was signed between the government and the PDD employees on December 20, 2021 night. The flash strike pushed Jammu and Kashmir into darkness for three nights in harsh winters.

Given the high velocity with which the government moved in Jammu and Kashmir’s energy sector, a showdown was anticipated between the power corridors and the political class. It, however, triggered a short circuit as the new planners and the old managers blipped at variance. It triggered a sort of crisis that demonstrated itself by the army engineers clicking selfies in the power stations rendered frozen by the lightning strike of over 22000 employees manning Jammu and Kashmir’s five power corporations.

Employees including engineers started with pen-down and soon got into the tool-down phase on December 17, night. The impact was gradual. Initially, no major outages were seen in the twin cities of Srinagar and Jammu, the major energy users in Jammu and Kashmir. Almost 24 hours later, there were protests as people fighting intense cold started coming out on roads. The crisis was visible in Jammu unlike Srinagar, where the maximum shortfall was in systemic failure in distributing 300 MWs of energy.

In Jammu, authorities initiated talks with the protesting employees with Divisional Commissioner, Raghav Langar as the chief negotiator. By December 19, afternoon, it was clear that ice was unlikely to be broken as Sachin Tickoo, the Secretary General of the JKPEECC (J&K Power Employees and Engineers Coordination Committee) proved a tough icicle that refused to melt. Soon after the military engineers were seen getting into the power stations in the Jammu periphery to help restore power.

“Personnel from REC, NTPC, NHPC, and officers from the army engineering corps have also come. This only shows our commitment that we restored 60 per cent electricity yesterday and by tomorrow we will achieve 100 per cent restoration,” LG Sinha told a Srinagar gathering on December 20. Reforms, he said were sacrosanct and will not be compromised.

The same night, however, in the follow-up meeting, Langer, this time ‘empowered’ enough, managed a breakthrough. The administration agreed to all four demands and the strike was over. “It was a huge relief,” one senior engineer admitted. “Initially, the two sides were stuck to their positions so deeply that I thought it is going to be hugely ugly.”

The Power Unbundling

The strike was the first tension of power unbundling, a major sectoral reform initiated in 2012. Kashmir energy’s institutional infrastructure comprised two major components, the Power Development Department and the Jammu and Kashmir State Power Development Corporation (JKSPDC). While the latter was exclusively mandated to generate power – it owns the 900-MW Baglihar Power Project, the PDD would do all other activities including sale, purchase, transmission, and distribution. With energy becoming an open market commodity and energy flowing from diverse sources – hydropower, solar power, thermal power, the traditional system of its management had become untenable.

With a GenCo (JKSPDC since 1995) already in place, the policymakers started converting specific activities into different corporations. PDD wing that would oversee the transmission of power became Jammu and Kashmir Power Transmission Corporation Ltd (JKPTC); the small section of professionals purchasing energy from power exchanges and grids became Jammu and Kashmir Power (Trading) Corporation Pvt Ltd (JKPCL). For distribution of the energy to the end-user, however, two DisComs came into being – Jammu Power Distribution Corporation Ltd (JPDCL) and Kashmir Power Distribution Corporation Ltd (KPDCL). Now the PDD in the civil secretariat is overseeing five energy corporations mandated to deliver diverse interlinked services.

Grid stations handed over to army, police in Jammu in wake of the strike by the PDD employees in December 2021. Pic: Police

The reforms process was aimed at managing the water-abundant power deficit state professionally and exploring the possibility of minimising losses and even making profits in the long run. JKSPDC was already making a profit but it was never paid in cash by the PDD and most of its sales were book-adjusted. This was a key factor that prevented it from becoming a public listed company despite earning almost Rs 350 crore profit a year.

At the start of the unbundling, everybody in the power sector knew that two of the four corporations – the JKPTCL and JKPCL, will be in profit from day one. JKPCL has the mandate of purchasing the cheapest possible power and selling it to two DisComs, at a cost including its services. The JKPTCL has already a vast transmission network and has to measure the energy wheeled in and out and charge 7 per cent, already in vogue in the market.

However, the only cause of concern was and remains the two hugely loss-making DisComs that require a huge quantum of energy but is unable to pay for the same. Requiring energy worth Rs 22 crore daily, the two distribution companies consumed 18091 million units (worth Rs 6317 crore) in 2020-21, an increase by six per cent over 17079 million units that it supplied in 2019-20. These two companies, however, are barely able to collect a tariff equalling one-third of the energy they draw. Many think huge AT&C losses are the key culprit.

The loss-making DisComs will have an adverse impact on the financial health of other companies because they operate on what they earn from them.

Joint Venture

Even before the unbundling started, the government had taken a conscious decision of tapping the vast hydropower resource base by getting into a Joint Venture (JV), primarily with the hydropower giant, NHPC. In October 2008, the JKSPDC inked an agreement with NHPC to create Chenab Valley Power Projects Ltd (CVPP) for implementing three power projects totalling 2300 MW. The two partners held 49 per cent of the equity each with the balance two per cent going to NTPC.

In February 2019, the Jammu and Kashmir administration led by Governor Satya Pal Malik signed an agreement with NHPC under which another JV, reportedly named Ratle Hydroelectric Power Corporation Limited, was constituted for implementing 850-MW Ratle power project. Reports suggest that in the JV, the hydropower giant holds 51 and JKSPDC 49 per cent. Details of the JV are not known as the MoU was never put in the public domain. The company was incorporated in April 2021.

In January 2021, the administration led by Lt Governor, Manoj Sinha handed over five power projects to NHPC totalling 4134 MW. Interestingly, it included the Ratle project for which JV had already been done. The deal took place under two separate agreements, which are still not available in the public domain. The only information available is that these projects will be returned to Jammu and Kashmir after 40 years of operation by the NHPC.

The Strike

At the time of unbundling when the employees on the PDD rolls were told that they will be deputed to the upcoming corporations, they resisted seeking benefits and job guarantees. They agreed after the government assured them that their deputation will not alter their status. Their interests were explained in detail in the Government Order No 191 issued on October 23, 2019.

All the PDD employees working in different wings were deputed to the respective corporations. Soon, they started facing issues, mostly the delay in salaries and even the daily wagers whose regularisation was on cards got stuck in the secretariat. This led the employees to start talking to their bosses.

The PGCIL

As talks resumed, and the files started being tossed and dusted Munshi Majid Ali, the JKPEECC leader said they got a whiff about another JV that India’s power transmission giant, Power Grid Corporation of India (PGCIL) was so keen to have with the JKPTC. The details of the agreement that was supposed to be signed on December 13, are still not known.

“It was at conception stage but there were pressures that it must happen quickly,” Sachin Tickoo said. “The entire idea was that PGCIL should ink a JV with JKPTCL on a 50:50 basis under which the Jammu and Kashmir will give the entire transmission network up to 33 kV level of grid facility to the central power utility.”

Sachin said the JV was based on an advisory by the power ministry suggesting the states and UTs that lack capacity to invest in the better transmission network must tie-up with the PowerGrid. “We said you cannot do this in a rush because there are many stakeholders and under the Central Electricity Act, JERC (for Ladakh and Jammu and Kashmir) needs to be consulted first and because it is a huge infrastructure, which cannot be given without a reason,” he said.

Power Transmission

The power transmission utility is the second most vital asset after a chain of power stations in Jammu and Kashmir. Though the company is yet to create a formal balance sheet, people who have evolved with the transmission network insist the company is worth Rs 12000 crore plus. Some of its major investments have taken place very recently by debit to the funds that came from PMRP and PMDP. It owns almost 400 Ckm (Circuit Kilo Meters) of 220kV lines and more than 1000 Ckm of 132 kV transmission lines in Jammu and Kashmir. Its transmission capacity is jumping from the existing 2340 MVA to 2800 MVA (million-volt amperes) by the end of the current fiscal.

Officials have not been forthcoming on the shady JV, at least formally. However, an official, who is in the know of things said Jammu and Kashmir has to manage an investment of Rs 4950 crore in the transmission set up by 2027. While part of the funds will from the public kitty on a year or year basis, it still would require arranging more funds to finish the target. “There were a few options and one was tying up with PGCIL and creating a JV on an equal share basis with a condition that they will arrange the borrowing on our behalf as well,” the officer said. “Though the draft agreement that was making rounds on social media was neither real nor acceptable, it contributed to the crisis.”

The officer said the idea was “misinterpreted” and a lot of engineers at various levels had their own apprehensions fearing a takeover and eventual privatisation of the company, currently owned by the government totally.

Split Costs

This controversy was linked by the people with the conversion of Jammu and Kashmir state into two UTs, a decision that they believe cost the infrastructure dearly. On the consistent insistence of the Ladakh region, the Government of India, under Prime Minister’s Development Package (PMDP) funded the 334-Ckm 220 kV power transmission line between Srinagar and Leh. Primarily aimed at connecting the desert region with the national grid and helping the belt fight cold in winters, the line was hugely required to evacuate the power that two NHPC-owned power projects (Nimo Bazgo and Chutak) were generating in summers. PMDP contributed 95 per cent of the Rs 2266 crore to the project owned by PDD that Prime Minister formally threw open in February 2019.

After the creation of two UTs, this intra-state line became an inter-UT line thus falling under Inter-State Transmission System (ISTS) network. Since all the ISTS’s are supposed to be managed by the PGCIL, it had to take it over. Power ministry issued an order on May 29, 2021, transferring the facility to PowerGrid retrospectively from October 31, 2019. The only issue that remains unsettled is whether the PGCIL will pay the entire amount or simply the five per cent that the erstwhile state government had paid. Worth mentioning here, PGCIL was just a contractor of the project and is now its owner!

With this facility gone, JKPEECC regrets the Jammu and Kashmir and Ladakh UTs will pay seven per cent costs for wheeling the energy either way. This is despite the fact that they owned the line.

CVPP Issues

The agreement between JKSPDC and the NHPC is clear about the roles and privileges that the two companies will have in managing the JV. It was led by former JK Bank Chairman, M Y Khan for eight years till July 2018. The JV had to have almost half of the professionals from Jammu and Kashmir in most of the categories.

“The tragedy is that it has sanctioned staff strength of 281 people and right now there are nine people from PDD,” Munshi said. “People, who are willing to serve there, are being chased away. One of our senior engineers faced so embarrassing situation that he undid his deputation within six months and return to the parent department.”

The agitating engineers said CVPP being part of the PDD should offer avenues to the state engineers to work and get experience. They demanded a white paper on the functioning of the CVPP.

With all these issues as their priority and the LG Sinha’s government having nothing much to explain, the administration was pushed to a corner. “If the government wants reforms, these must take place in the distribution companies and not where our companies are already in profit like the JKPTCL,” Munshi said. “There was no plausible explanation that we could get.”

Pace Compromised

These factors led the administration to give in within three days and agree to most of the demands that agitating employees were making. “They have put the JV on hold,” Sachin said. “They agreed to the demand that stakeholders will be taken on board but I ensured ‘stakeholders including JKPEECC’ so that we also know what it is all about.”

The agitation, however, evolved as a spanner in the power wheel and has retarded the pace of “reforms”. Insiders said it is just a halt and not a retreat. Load shedding may not see a major change but a lot of heat will get generated from Kashmir’s water resources in the coming days.

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