J&K’s Favourite NHPC Facing 584 Litigations,
Four Criminal Liabilities
By Syed Junaid Hashmi
30 April, 2011
Countercurrents.org
National Hydroelectric Project Corporation (NHPC) which has been major stake in Jammu and Kashmir’s Hydroelectricity generations has 584 litigations including four criminal liabilities, with financial implication of Rs 5.9 million pending in various courts across the country.
Official documents, copies of which are with Early Times, Jammu, affirm that NHPC is involved in four criminal liabilities, with the financial implication of Rs 5.9 million. They unveil that there are nine environmental litigations against the company in relation to its completed and ongoing projects, the financial liability of which is not quantified.
There are 81 arbitration proceedings pending against NHPC. There are 146 civil cases filed against NHPC and 9 civil cases filed against NHDC by various entities including construction contractors, and the aggregate value of the claims amounts to Rs 698 million, plus interest. There are around 416 land-related litigations against NHPC, the aggregate value of which is Rs 10.25 billion
Documents reveal that even labour-related legal proceedings and motor accident claims are also filed against the company. Besides, NHPC also has various petitions filed against it in public interest, which are pending before Supreme Court, financial liability of which is not quantified. The documents while referring to the performance of NHPC since its inception in 1975 says that it has highly concentrated customer profile towards North based State electricity utilities, which have a relatively weak financial profile while concluding that this poses counter party credit risk.
It also says that the projects undertaken by NHPC have significantly longer project execution period which depresses the equity returns during the construction period. The longer execution period coupled with regulated tariff for all the projects limits the potential upside on equity and zan possibly lead to increase in project costs and tariff from these projects
Regarding the manner in which NHPC woks, the official documents unveil that NHPC awards projects to various contractors on competitive bidding basis and these construction contracts include “price variation” as well as “force majeure” clauses and hence the project cost escalates for the reasons which may be unforeseeable.
It affirms that escalations in the project cost is initially incurred by NHPC and thereafter, the government has to approve it as a part of revised project cost and then this revised cost is later considered by CERC for determining tariff for the station. It needs to be mentioned here that of the 13 projects, NHPC runs three projects in J&K namely Salal, Uri and Dulhasti. The flagship Salal power project is a major contributor to its kitty because it produces the cheapest energy – Re 0.63 per unit – in India.
In fact, NHPC took off from J&K when it started Salal in 1975. Though it has expanded and invested heavily in various projects and joint ventures (JVs) across India, J&K continues to be its major power house. It has cumulative 1560-MWs capacity in operation that has taken a total staggered investment of Rs 9554 crores.
In coming days, NHPC’s harvest from J&K’s waters would only increase. Its four projects with cumulative installed capacity of 449 MWs would be completed between 2010 and 2012. These are Uri-II, Sewa-II, and the twin micro projects of Nimu-Bazgo and Chutak in Ladakh.
Besides, it has six other projects in J&K already handed over by earlier National Conference government. That would add up 4160 MWs to the NHPC kitty. Most of these projects are being funded by debit to the Prime Minister’s Reconstruction Plan (PMRP). These projects include the highly disputed 330-MW Kishanganga, 1000-MW Pakal Dul, 1020-MW Bursar, 600-MW Kiru, 520-MW Kawar, and 690-MW Ratle.
Off late, the NHPC and J&K Power Development Corporation are working jointly to set up a JV for three power projects – 600 MW Kiru, 1000 MW Pakal Dul and 520 MW Kawar. These involve an investment of over Rs 12,720 crore - on BOOT (build, own, operate and transfer) basis.
Syed Junaid Hashmi is a Journalist based in Jammu and has been doing research work on New Delhi's peace initiatives in Jammu and Kashmir. He can be reached at [email protected].
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