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Micro development in big way

Government’s new power policy has managed to change the status quo in J&K's dormant power sector. But with difficulties galore, how far would it go. Haroon Mirani reports.

Srinagar, Sep 04, 2013:

In December 2011, a government order empowering Jammu and Kashmir Energy Development Agency (JAKEDA) with the construction of micro hydel projects initiated a sweeping change in otherwise stagnant energy sector of state.

The water rich state, sold as haven for mega hydro electric potentials always overlooked the fact that small and micro hydel power projects equally constitute an promising future.

On account of big hydropower projects, J&K has a potential to generate 20,000 MW. But the projects had been stuck partly due to objections from Pakistan and partly due to dearth of finances. In order to overcome the situation the state government in 2002 formulated a plan to develop small and micro power projects. The plan was stuck in state’s notorious red-tape and a full decade later the government came out with “Policy for Development of Micro/Mini Hydro Power Projects-2011.”

The policy gave a mandate to JAKEDA to develop projects upto 2 MWs capacity.

“Since then, we have been working overtime to identify and allot the micro hydro power projects in private sector,” said Shibanji Koul, Executive Engineer, JAKEDA.

Estimates by JAKEDA said the potential in this sector is huge. “Till now we have been just scratching the surface,” said Koul. “Our estimates indicate the micro hydro projects have the capacity to produce almost 5000 MW of cheap electricity.”

Considering that the state peak need of electricity is 2500 MWs, the difference made by the micro projects is expected to be big.

This year alone JAKEDA has started the competitive bidding for three lots of projects. In the first phase, six projects were allotted and ten in the second phase. The ongoing third phase is expected to allot 16 projects.

“We have taken up the target of allotting minimum of 200 projects by 2014,” said Koul. “They will have a cumulative capacity of 340 MWs.”

As of now the state only produces 780 MWs of electricity in state sector against the peak load of 2500 MW. Consumers have to face shortage of upto 20 hours a day during winters. Besides, there are hundreds of hamlets and habitations, which are yet to be connected to the grid.

These projects when completed will revolutionise the energy scenario particularly in the remote locations.

These power projects are being initiated to cater to the needs of particular areas they are located in, rather than supplying the power into national grid.

While inaugurating the 10 MW Drungi Micro Hydro Power project last month, Chief Minister Omar Abdullah asked the authorities to utilize the power in local areas of Tangmarg and Gulmarg, instead of linking it to grid. The project was completed in Independent Power Producer (IPP) mode by a local company at the cost of 90 crores.

The policy paper too dictates the condition, “Micro / Mini Hydel projects may be built in isolated areas that would be uneconomic to serve from a network, or in areas where there is no electrical distribution network.”

“We have a 2 MW MHP Dahi lined up in Gurez, valley, which will meet the requirement of this cut off place,” said Koul. “Taking transmission line to that place is impossible, so it is here a MHP will show its utility.”

Benefits

J&K is an ideal location for micro and Mini Hydel projects. The topography of State provides extensive network of canals and streams. With majority of them having higher than average gradient, their potential increases exponentially compared to other states.

The Indus Water Treaty signed between India and Pakistan puts J&K in a peculiar position over water usage. As per treaty Pakistan has rights over three main rivers (Indus, Jhelum and Chenab) that originate from J&K.

“For every water project we have to get clearance from Pakistan and there is always fear of opposition on various grounds and many of our mega projects have been stuck or delayed due to their opposition,” said Koul. “But these small run of the river projects don’t face any opposition from Pakistan and they clear them within days.”

These projects also require minimal construction work, with minimal or no requirement of a reservoir.

As per policy, projects shall be completed and made operational within a period of 36 months after receiving all statutory clearances. The officials feel that if the work is speeded up the project may come up sooner.

According to the policy, the state Government will facilitate provision of statutory clearances in time bound manner. The government to government seeking of clearance is expected to speed up the process.

One of the biggest benefits of the micro hydel projects is their minimal impact on the environment. They don’t need diggings, huge diversions, inundation and erection of others structure which often clash with the environment.

The policy strictly states that only the local residents can bid for the projects. Only in an extreme situation can an outsider bid for the projects, but that too has to have a local resident as an equal partner.

According to the new power policy the local residents hold the exclusive rights on the projects to the tune of 10 MW.

The move has been formulated to stop flight of capital, nurture local entrepreneurship and create jobs for locals. “Entrepreneurs of the state are being provided encouraging facilities and help to invest in the sector and be part in the economic development and prosperity of the state,” said Abdullah recently at a function while highlighting the need for local investment in power generation projects.

Earlier attempts

Earlier too the government tried to harness MHP’s but they were limited to projects of KW capacities.

Indian army has been one of the first institutes to enter into the domain of micro projects. They had an ambitious plan to build 1000 micro power projects, which would have generated around 3-5 kva (kilovolt ampere) each. They were provided funding to the tune of Rs 12.38 crores to accomplish the task.

Each project was expected to benefit around 15 to 20 households in 2009. But the project soon ran into trouble and the state government in 2011 admitted that 80 percent of these projects are non-functional. Although there were calls to address the problems, but the situation has not changed much.

JAKEDA officials refused to discuss the issue as they term it as an exclusive Indian army domain.

Ministry of New and Renewable Energy (MNRE) had also actively worked towards assisting the development of micro projects. They provided generous funds to upgrade 2000 traditional water mills for electricity generation and mechanical activities. “We have already updgraded 50 water mills and the work is on to upgrade others too,” says Koul.

Ladakh progresses

The Ladakh region, which is already making records in harnessing renewable energy in the state, is also exploiting the hydro potential at micro level.

Last year Chief Minister laid the foundation stone for six micro hydel projects to be built under Ministry of New and Renewable Energy sponsored flagship programme, Ladakh Renewable Energy Initiative Project (LREI). These projects are expected to be completed by the end of 2013 at a total cost of Rs.52.13 crores.

Six more micro hydel projects in Nubra valley are also under process and are expected to be commissioned by 2014. According to the LREDA officials the successful completion of these projects will cater to the electricity need of the entire valley.

Micro hydro electric projects are usually the first choice of LREDA, primarily because of them being extremely economical. LREI has a provision of Rs 266 crores for 30 Micro Hyrdo power projects with a total power generation of 23.7 MWs. The projects in the capacities of 150 kW to 3 MWs, would be completed by the end of 2013. Ladakh is expected to save 20 million litres of Diesel fuel annually once these projects go online.

Under LREI, Ladakh has also taken up the task of setting up 50 pico hydro power projects with a capacity of up to 5 kW each. Already in various stages of completion, the projects are expected to be commissioned in the coming months. These projects get a subsidy of 75 percent from MNRE. A typical 5 kW mill provides lighting needs of 10 houses.

Problems

Of late these mini projects have run into trouble too. The water charges imposed by Jammu and Kashmir Water Regulatory Commission, is being termed as too harsh by IPPs. Calling it a huge burden, IPPs say that it can derail the entire process. According to the commission regulations, every power project has to pay the charge upto the tune of Rs 7 per unit in addition of an upfront charge of Rs 5 lakhs.

“The water charges have to be rationalized,” says Mir Mudassir, MD Magpie, whose company was one of the first to develop a power project in IPP mode. “The charges should differentiate between the mega and the micro project, it cannot charge everyone with a same rates.”

Koul also acknowledges the problem. “This is s a serious issue, even some of the IPP’s have threatened to withdraw their bids,” said Koul. Top officials at JAKEDA have taken up the matter with concerned authorities are seeking amend the clauses for exempting the projects upto 25 MW from the charges.

If the charge is imposed, the cost of per unit electricity produced from these projects will rise from Rs 3 to Rs 10, thus making it unviable for consumers.

Financing has been a big issue with IPPs too. With the exception of J&K bank no other financial institute is ready to give fund the projects.

“The situation is simply frustrating for us,” said a local IPP, who wished not to be named. “There are dozens of other banks in the state but they simply refuse to provide us funds, citing various reasons including article 370.”

The banks fear that if a person defaults they won’t be able to seize his property, as the state law makes it clear that no outside person or any organization can have ownership rights of the local property.

“They are simply treating us as outcastes, even if we pledge to return every penny back,” he said.

The cash starved state often finds it difficult to regularly pay the IPPs on account of electricity supplied by them. This is undermining the viability of these projects. “There is no mechanism, if government fails to deliver us the payment, how are we supposed to pay back our loans,” said Mir. “At least there should be a mechanism of payback in tune with bank policy.”

Mir’s company has successfully completed two micro power projects and third is in the pipeline. The company also successfully bid for three more micro hydro projects, making it a rare success story in the state. Despite many odds, Mir is holding on, giving a hope that some things can work here too.

(This article has been written under the aegis of CSE Media Fellowships 2013.)

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