Power at a price

After 25 years and spending nearly Rs 5,000 crore, the 390 MW Dulhasti project will be generating power by the end of this financial year at a cost of Rs 5 to 5.50 per unit.

After 25 years and spending nearly Rs 5,000 crore, the 390 MW Dulhasti project will be generating power by the end of this financial year at a cost of Rs 5 to 5.50 per unit. However, the National Hydel Power Corporation NHPC has already entered into power purchase agreement for supplying them power at a rate between Rs 3 and Rs 3.50 per unit.

THE situation appears to be no different in the case of 450 MW Baglihar hydel project its cost has gone up from Rs 4,000 crore to Rs 5,000 crore, fuelling speculations about increase in per unit cost of power generation which was worked out to be Rs 3.67 per unit when the project was estimated to cost Rs 3,810 crore in 1999. The project, which was scheduled to be commissioned in 2005, is now expected to start generating power by December this year.

All this just goes to show that power may not come cheap. Now, sources say beneficiary states were not prepared to buy power to be generated at Dulhasti at an exorbitant rate between Rs 5 to Rs 5.50 per unit.

Though officials attribute escalation in cost of both the projects to their long gestation period and other crises like the 2005 floods, Power Minister Jora admits that no hydel project on the Beas or the Chenab is economically viable because of its difficult terrain. 8220;That is why large amount of money is being pumped in as grant-in-aid out of Prime Minister8217;s economic package to make these projects economically viable,8221; he points out.

Of the Rs 24,000 crore grant-in-aid announced in Prime Minister8217;s package to the state, nearly Rs 14,000 crore are meant for power projects.

The project cost of Dulhasti had already shot to Rs 462 crore when the NHPC took it from the state in 1985. The contract for its commissioning was given to a French Consortium in 1989, but its civil contractor left the work halfway in 1992 because of the law and order situation. Work on it was stalled for four years.

Finally, when the NHPC engaged J.P. Industries presently J.P. Associates Limited in 1996, the project cost had risen to Rs 4,000 crore. It was scheduled to be commissioned by October 2003.

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Now, when Dulhasti is nearing completion, the state has staked claim over it as a compensation to the losses incurred by it in view of Indus Water Treaty. 8220;The matter is under consideration of the Prime Minister,8221; says Jora, adding that Dr Rangarajan, who is chairman of the PM8217;s working group on economic reconstruction, has recommended its transfer to the state.

The transfer will have twin benefits. First, it will relieve NHPC of a commercially unviable project and second, it will improve the power situation in Jammu and Kashmir.

On Baglihar, Jora says that the cost of power generation will come down substantially once its second phase of 450 MW gets operational. Essential work on it has already started and it is estimated to cost Rs 1,750 crore.