By Sanchet Barua
Northeast India has been identified as India’s “future powerhouse” and 168 large hydroelectric projects, having a capacity of 63,328 megawatt, have been proposed in the region. Arunachal Pradesh and Sikkim have been in the forefront, with close to 50 agreements signed cumulatively by both these states with power developers for large hydroelectric projects in the last three years. Even as New Delhi looks to the region to provide power to the nation, the state governments are expecting to earn large revenues from power export to other states.
While this may seem a win-win scenario, several questions have been raised about the viability of this major dam-building exercise. Dulal Goswami, environment scientist and expert on the Brahmaputra river basin, reminds that the geophysical nature of the river basin is fragile and dynamic. Scientific knowledge of the river system — such as hydrology and sedimentation, both of which are linked to the economic life of the project — is still very poor. This needs to be strengthened urgently, more so in light of emerging threats from climate change. Without the availability of comprehensive information, says Goswami, it is not possible to determine the long-term viability of the projects. He also points out that many of the mega projects planned would have tremendous ecological and social costs.
A number of protests across the Northeast have recently brought to light the fact that there is little effort to assess the social and environmental impact before giving a green signal to the hydel projects. But even as the groups grapple with how to address the concerns in an increasingly insensitive administrative framework, there is clearly a need to understand and engage with power sector planning issues.
One of the reasons for the shrinking space for addressing social and environmental issues for these projects is the strong perception in many quarters that each of these large projects is critical for meeting India’s energy security. Girish Sant of Prayas Energy Group, a leading organization working on public interest — power sector issues admits that development needs increased energy services. But demand forecasts that planners make are usually an overestimate and there is a bias towards centralized large projects to meet this highly inflated demand. This is not a cost-effective way of getting the required services. Sant says that given the increasing conflicts over the sites for new power projects, there is an urgent need for an alternative approach towards power sector planning, such as integrated resource planning.
Such an approach can have substantial environmental and social benefits as energy services can be delivered with a sizeable reduction in the number of new power plants required by the country. IRP considers a mix of supply-side and demand-side solutions while giving equal importance to both. It includes a combination of cleaner centralized energies, decentralized renewable energies and efficiency improvements, which together provide energy services at lower costs. Several such alternative studies indicate that the new generation capacity required can be reduced by as much as 50 per cent of that reported in the official conventional plan. Such information could prove extremely critical in the discourse on dams in the Northeast, where state governments like Sikkim and Arunachal Pradesh keep expressing helplessness in response to popular opposition to projects. They cite the country’s power needs as the reason to build the projects at any cost.
The concerns of environmental scientists such as Goswami, who believe that hydropower projects in the Northeast are coming up in spite of poor hydrological data, could also be addressed by appropriate changes in the tariff regime imposed by the Central Electricity Regulatory Commission. Prayas had brought up this issue in a November 2007 communication to the power ministry on the proposed revised hydro policy. The current tariff regime results in an asymmetric division of risks between producers and buyers, allowing hydropower producers to get away with a lack of comprehensive hydrological data during the planning phase. This is because the tariff regime allows producers to recover full charges, along with incentives, even when the actual generation is low owing to low water availability Buyers end up paying higher tariffs despite getting less electricity.
In contrast, during periods of high water availability the economic benefit of increased power production goes to hydropower producers alone, and not the buyers. Thus the entire downside of hydrological risk is borne by the buyers, while the benefits during happier times are kept by the power producer. This skewed distribution of risks and rewards insures that there is no economic deterrent that would ensure that power projects go for an optimum design that would use comprehensive and realistic hydrological data. The current experience shows that several dams are delivering electricity lower than estimated. This is a result of “over designed” dams which were built on unrealistic data. They lead to wastage of public resources, and the significant social and environmental costs make them unviable.
An appropriate solution would require the CERC to change the tariff regime so power producers bear the risk shortfall in generation owing to lower water availability In such a scenario, developers will have to seek greater surety in the design data. Financial institutions would also need to ensure that projects do not suffer excessive losses during the low-water years. Not only will this ensure that projects are not posed till adequate data is generated, but also help weed out projects greater hydrological and associated economic risks upfront. The As state electricity board, which buys hydroelectricity from neighbouring
states, has appealed to the CERC to view the hydro-tariff regulations order to ensure a more equitable distribution of risks. Even though central advisory committee of CERC discussed this issue in June 2007, the draft amendments to the regulation on terms and conditions of tariff, issued for public comment in October 2007 do not incorporate these changes.
Other than the revised hydro policy and the proposed amendment the tariff regulation which are in the pipeline, there is also the task force on hydropower development which set up in September 2007 to examine and resolve all issues related to hydro power development. This was follow-up of the conference of chief ministers held in May 2007. From the Northeastern states, this task force represented by the ministers of power of Arunachal Pradesh, Assam and Sikkim. INAV