Solar Power Controversy: Generate In Kathua, Sell From UP

Shams Irfan/Riyaz ul Khaliq

KL NEWS NETWORK

SRINAGAR

Solar Power

It is following the same old script that J&K knows for long. The 100-MW Solar Power Plant in Kathua is nowhere but has already created a Himalayan controversy generating more heat than the proposed photo-voltaic plant could ever create.

The project that NC-Congress government approved in 2013 witnessed fundamental changes this summer. Promoters insisted on Power Purchase Agreement with J&K state despite the fact that the government had already granted it an Open Access for wheeling of energy anywhere in India.

Kashmir Life accessed a set of documents linked to the proposed project and found interestingly glaring instances. The company that had bagged the project had divested as many as 90% of shareholding with another Jammu based company in July 2015. Interestingly, both the companies that entered into a JV lack any track record in the renewable energy area.

Here follows the part of the chronology of the project till it reached the newspaper front-pages and snowballed into a controversy with political parties seeking resignation of the Deputy Chief Minister.

March 22, 2013

Science & Technology (S&T) department of J&K government accords sanction to a five member project approval committee to be headed by S&T Commissioner.

June 20, 2013

J&K’s S&T department informs Power Department that they have awarded 100-MW grid connected photovoltaic power plant at Chhan Arorian in Kathua to Then India Energy. Apart from requesting the power department to help, through DC Kathua in land demarcation, the communication requests that Power Development Commissioner be advised to initiate Power Purchase Agreement (PPA) with the Chennai based developer.

September 2, 2013

Chief Engineer PDD Systems & Operations wing informs the Power Development Commissioner about the visit of his team to explore inter-connectivity. The team suggests inter-connectivity with 132-KV double circuit Gladni-Hiranagar line for evacuation of the energy generated by the plant. “…decision needs to be taken immediately for brining up infrastructure at 132 KV level for clubbing the generation from solar plant and PDD System,” the communication reads. “Investment required in this regard and estimation etc shall be taken up separately with representatives of Independent Power Producer (IPP).”

October 4, 2013

Promoter Then India Energy Pvt Ltd is being advised by Science & Technology Department “to execute an open access agreement with J&K Power Development Department under the conditions laid down in J&K State Electricity Regulatory Commission – JKSERC (Open Access In Intra-state transmission and distribution) regulation act, 2006”.

Under the Open Access Agreement, the power generators in private sector have right to wheel the energy to whichever destination they want at a fee. Three Independent Power producers (IPP) which are owning three small power projects across the state are using this facility to sell their energy to the Power Trading Corporation instead of the PDD, because the latter sees their energy expensive and does not purchase.

April 21, 2015

In a review meeting of IT and S&T departments presided over by Chief Minister, Deputy Chief Minister, Finance Minister and three other ministers, state’s S&T minister seeks facilitation of the 100-MW Kathua project. He says the developer has not been able to sign a PPA with PDD. Chief Minister desired that PDD may facilitate signing of PPA with the developer at “rates issued by SERC”.

Finance Minister observes that the per unit cost of solar power is “relatively expensive” when compared with hydropower. “…as such signing of PPA with the developers in this context would be a challenge for PDD,” the notes have recorded. However, S&T secretary explained that under Renewable Power Purchase Obligations (RPO) and its compliance and REC Frame Work, the state has to necessarily buy solar power to the extent of 1.5% (of the energy demand) and 6% from non-solar (other renewable energy) sources during 2015-16, “irrespective of the unit cost of energy”.

Later, the meeting concluded (on this issue) with a direction that state would formulate a Power Purchase Policy that would factor in PPAs to be signed by IPPs with the state utilities (PDD) viz a viz RPO targets. “The Chairman also took the note of the sharply reducing cost of renewable energy and expressed possibility of renewable energy being very competitive in the power market in near future,” the file records.

The Deputy Chief Minister interacting with a delegation of Sikhs of Kashmir valley in Srinagar on Wednesday in Srinagar.
The Deputy Chief Minister interacting with a delegation of Sikhs of Kashmir valley in Srinagar on Wednesday in Srinagar.

July 21, 2015

The Chennai based Then India Energy that was allotted the project by S&T department enters into a Joint venture with Venayak Energy Pvt Ltd that is promoted by Amarjeet Singh, a resident of Nanak Nagar Jammu. The two parties name the JV Venayak Then Energy that would operate from Jammu.

The JV deed submitted to the J&K government mentions the purpose of the JV like this: “Both the parties have entered into a Joint Venture Agreement exclusively for the purpose of execution of solar hybrid power project of 100 MW allotted by the J&K state government and to enter into Power Purchase Agreement (PPA) with the J&K State Government for the purpose of purchase of power to be generated through Solar Hybrid Power Project.” It adds further: “In future the Joint Venture shall be the sole representative to present, represent, deal with the J&K State Government and other departments and authorities in all matters…”

In an interesting turn, the Then Energy India that was allotted the project divests its equity to ten percent as the new partner from Jammu takes over 90% stakes!

The agreement signed between Arirudh Chandel (for Then India Energy), a resident of Pacca Danga Jammu with Amarjeet Singh (Venayak Energy) had two witnesses: Jatinder Kumar Gorka (Bansultan Miran Sahab) and Shakti Singh Manhas (Khour, Akhnoor).

July 31, 2015

Chief Minister’s Secretariat sends a DO to the power secretary with an enclosure of a letter from Director Venayak Then Energy regretting the delay in signing the PPA. The DO asks the secretary “to take necessary steps for addressing the issue highlighted by the developer so that the first Solar Power Plant in the state is set up as per schedule”.

August 2015

Then India Energy submits a draft PPA to PDD.  It invokes J&K Electricity Act, 2003, that is not in vogue as it has been amended. The act mentioned in the draft PPA lacks any reference to alternative energy sources! The draft PPA seeks 132 KV Interconnection Point at Unchahar Switchyard of Venayak Then Energy. Kashmir Life has failed to trace Unchahar in J&K and google search engines traces it in Rai Bareily in UP. The point of inter-connection in energy sector means from the spot where energy will be charged to a line. Under the systems in vogue, all the losses in transmission from the point of inter-connection are buyer’s problem.

It wanted PDD to sign within 45 days of the PPA signing a separate Escrow Agreement for the establishment and operation of the Escrow Account in favor of the power producer.  Had it happened, it would have been unprecedented for PDD because it has no Escrow Account with any power supplier. The PPA wants to remain the tariff valid for 10 years after which it has every right to get into another agreement with a third party.

August 7, 2015

OSD of Deputy Chief Minister sends a DO to Power Secretary with the Chief Minster’s July 31 letter. “After lapse of more than three months in which the decision was taken i.e in April 2015, no action seems to have been taken by the Power Development Department and the Hon’ble Deputy Chief Minister has taken view seriously,” the note reads. He is asked to “take immediate necessary steps” regarding signing of PPA.

August 17, 2015

Chief Engineer (Commercial and Survey Wing) submits a report to the power secretary detailing his findings on the project and his observations as the custodian of power purchase. He invokes many issues: For any long term or medium term power purchase, there should be a “proper process of transparent bidding” to discover the competitive rate and fair price.

“It is not binding on the state or utility to enter into agreement/PPA with a power producer whether solar, wind or hydel as non-signing of agreement /PPA does not debar the power producer to install the project since under open access system the power producer within the state can be sold anywhere outside the state,” it reads. “In fact, IPP within the state are already selling power through open access outside the state.”

On Renewable Power Obligations (RPO) issue, the communication says the state under the rules can meet the requirements from small hydro power projects of JKSPDC. For solar part, the RPO is to be met from power produced from Chutak and Bazgo for which committee constituted for framing of power purchase policy has already asked CE (C&S) to file petition before JKSERC. It also details the new guidelines suggesting the NTPC run coal plants already having completed 25 years of useful life stand bundled with solar power.

Mostly importantly, the report says the SERC rates (fixed for renewable energy) are “quite high” and “do not represent the current market rates” for medium or long term basis “unless a transparent bidding mechanism is adopted in the interest of the state.” It mentions Madhya Pradesh going into bidding route for price discovery mechanism in wake of slump in power market and eventually getting solar power for Rs 5.05 per unit.

“In view of the above stated facts, it is neither advisable nor in the interest of the government to enter into such power purchase agreement with M/S Then India Energy Pvt Ltd binding the state for such a long term of 10-12 years with uncertainty of rates”.

September 5, 2015

S&T ministry receives a communication from Dr Rajeev Dhar, reportedly an expert in renewable energy informing that Then India Energy “has not done any power project in India and abroad”. It has asked the government to “look into it and see under which parameters the department has been given acceptance letter without any tender or any documents”. Besides, it has suggested the state government to opt for bidding process for allotting the Rs 700 crore project to a company which is already into solar power or has a good capital to invest in J&K.

September 15, 2015

The file goes with the direction from power secretary that the department should first work out the annual energy requirement and the amount of renewable power purchase requirements; and then work out tentative financial implications on basis of prevalent rates and explore booking of bundled power giving “certain degree of relief from costly solar power”. PDD should not enter into PPAs with power producers without determining reasonability and competitiveness of such offers through open bidding in view of emerging power market in India, the secretary further notes.

October 28, 2015

In a hurriedly organised press conference by Adil Khan (Claiming to be the Director) of the JV company said the allegations made against Dy CM for favouring his company are baseless. Khan said that there is nothing fishy in the process of the allotment of the power project to his company and alleged that the media reports claiming fabrication in the process of allotment are politically motivated.

“I own 5000 kanals of proprietary land in Kathua where the project is to be executed,” Khan said offering a bunch of official papers to the media persons. “I am the victim of the crisis.  My project has nothing to do with politics or the tensions that might be within the system.” He had various faces from rightwing groups around.

Talking to local news-gatherer CNS, Deputy Chief Minister Niramal Singh accused National Conference of its involvement in Solar Power Scam. “I welcome the statement made by an NC member who has demanded probe into so-called solar power scam,” Dr Singh said. “In fact I am in favour of probe and want that people should come to know about the facts. The fact is that whatever ‘ugly’ has happened has happened during previous government and if National Conference wants to befool the people then they are mistaken and don’t know about the consequences.”

National Conference as well as Congress had earlier sought a probe in to the proposed Rs 700 crore project.

“I was never in direct contact with the firm and have never passed illegitimate and unofficial orders to the former Power Secretary, Sandeep Nayak to allot the Rs 700 crore project in Chan Arorian, Kathua to Then India Energy Private Limited,” Dr Singh was quoted saying. “Whatever happened, happened in full knowledge of Chief Minister Mufti Muhammad Sayeed, Imran Raza Ansari, Sajad Lone, Haseeb Drabu and Pawan Gupta who were present in the meeting. The fault lies with father and son (Farooq Abdullah and Omar Abdullah) and they are directly responsible for all this mess.”

“I will be first person who will welcome the probe,” Deputy Chief Minister said. “I eagerly want to expose those elements who accuse me of fraud. Let the probe be ordered so that facts will surface.”

LEAVE A REPLY

Please enter your comment!
Please enter your name here