BY SANCHET BARUA
HE Planning Commission has identified Northeast India as ‘future powerhouse’ and 168 large hydroelectric projects, having a capacity of 63,328 megawatt, have been proposed in the region.
Arunachal Pradesh and Sikkim are in the forefront, with close to 50 agreements with power developers for hydroelectric projects in the last 3 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. Environment scientists and experts on the Brahmaputra river basin, remind 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 it is not possible to determine the long-term viability of the projects. 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 effects of 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.
Lower Water Availability
One of the reasons for shrinking space for addressing social and environmental issues for these projects is the strong perception that each of these large projects is critical for meeting India’s energy security. Mr Girish Sant of Prayas Energy Group, a leading organisation working on public interest-power sector issues admits that development needs increased services. But demand forecasts that planners make are usually an overestimate and there is a bias towards centralised large projects to meet this highly inflated demand. This is not a cost-effective way of getting the required services. Mr 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 centralised energies, decentralised renewable energies and efficiency improvements, which together provide energy services at lower costs.
Several such alternative studies indicate that 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 NE. They cite the country’s power needs as the reason to build the projects at any cost.
The concerns of environmental scientists, who believe that hydropower projects in the NE are coming up inspite of poor hydrological data, could also be addressed by appropriate changes in the tariff regime imposed by the Central Electricity Regulatory Commission. Mr Prayas has brought up this issue in a November 2009 communication to the power ministry on the proposed revised hydropolicy, to be announced soon. 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 lower water availability. Buyers end up paying higher tariffs despite getting less electricity.
Risks and Rewards
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 ensures 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 based 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 that power producers bear the risk of a 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 scrutinise design data to ensure that projects do not suffer excessive losses during the low-water years. Not only will this ensure that projects are not proposed till adequate data is generated, but also help weed out projects with greater hydrological and associated economic risks upfront. The Assam State Electricity Board, which buys hydroelectricity from neighbouring states, has appealed to the CERC to review the hydro-tariff regulations in order to ensure a more equitable distribution of risks. Even though the central advisory committee of the 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 hydropolicy and the proposed amendments to the tariff regulation which are in the pipeline, there is also the task force on hydropower development which was set up in September 2007 to examine and resolve all issues related to hydropower development. This was as a follow-up of the conference of CMs held in May 2007. From the NE, this task force is represented by the ministers of power of AP, Assam and Sikkim.
It is important that the task force addresses the issues mentioned above with respect to the Northeastern hydropower projects and the environment. It cannot merely restrict itself to push through large hydropower projects. A failure to examine the issue holistically, including looking at alternative power sector planning approaches, will be an invitation for large-scale future conflicts in the Northeastern region? –INAV
