DEVELOPMENT OF SMALL HYDRO POWER IN JAMMU AND KASHMIR (INDIA) Shafat Sultan Jammu & Kashmir Energy Development Agency (JAKEDA), Jammu-180001, J&K, India.

ABSTRACT: The Jammu & Kashmir is the northern most state of the Union of India. It is economically backward due to power crisis under which it has been reeling for the last few decades and therefore lacks an industrial base. Ironically the state is endowed with huge hydro power potential but the development in this sector has not been commensurate because of shortage of financial resources and the Indus Water Treaty signed between India and Pakistan. This treaty prohibits reservoir storage of water on the major rivers of J&K restricting the scope of generating electricity from hydro power to generation from only run off the river projects. This fact can be gauged by realizing that against a power potential of 20,000 MW, the State has been able to develop only 1474.65 MW till date. In order to tide over the power crisis and encourage generation of power through small hydro power sources of energy, the State Government of Jammu and Kashmir has framed a policy so that the development of this sector serves as an engine to achieve the objective of promoting the all-round development of the region. The objectives of the policy interalia, are to attract investors for the development of State’s water resources in an environment friendly manner and to generate revenue for the state from development of its hydel resources while ensuring project viability. A number of potential sites have been identified and quite a few have been allotted for development to Independent Power Producers. The small hydro power policy of the Ministry of Non-conventional Energy Sources (MNES), Govt. of India (GoI) and the liberal financial norms of various financial institutions for development of small hydro power complement the policy of the State Government and investment in these techno-economically viable schemes assure a secure market to the potential investors. The attraction for investors is therefore not only the incentives provided by the State Government and by the MNES, GoI but the financial viability of these projects as at an average a project in hydro power sector assumed to be developed under 70:30 debt equity norm can repay its debt in full in its first ten years besides paying back the entire equity, after which it is virtually a gold mine liability free with just a nominal operation and maintenance cost of 1.5% of the project cost thereafter it can contribute to generate huge returns for a long period.

I. INTRODUCTION The Jammu & Kashmir (J&K) is the northernmost state of the Union of India, situated at a latitude of 340.05 N and longitude of 740.05 E. It comprises three distinct regions of Jammu, Kashmir and Ladakh which are diverse in culture, geography and climate. The Jammu region is topographically plain and experiences sub-tropical climate. On the other hand the valley of Kashmir experiences temperate climate. Ladakh in contrast to both Jammu & Kashmir regions is mountainous with scant vegetation and experiences cold and arid climate. The state consists of fourteen administrative districts and 135 community development blocks and its population has touched ten million mark lately.

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J&K is one of the energy starved states of the country despite having tremendous hydro-power potential. One of the major constraints in tapping hydropower in the state besides shortage of resources is the “Indus Water Treaty”, to which both India and Pakistan are signatories. The Treaty prohibits reservoir storage of water on major rivers of J&K restricting the scope of generating electricity from hydro power to generation from only run off the river projects. The topography of the state (Jammu being the only rail link) together with remote & far-flung villages across the landscape compounds the energy crises. Transmission of power to these areas is not only un-economical but difficult as well. Worse still is the population density in some villages, where households are interspersed and habitations dispersed. In such geographical locations, electrification by laying long Transmission & Distribution lines

becomes

practically impossible. The state is otherwise also facing acute scarcity of power, which can be guaged from the fact that against a total peak requirement of 1427 MW (2004-05) of electricity, the state has hardly 374 MW (2002-03) of installed capacity in the state sector. The scarcity of electric power in remote and rural areas has put a lot of pressure on the forests thus endangering the ecology of the region. According to the available statistics, there were 203 un-electrified villages and 1.24 million households without any power supply by end of the year 2004-05, in the state.

II.

DEFINITION OF SMALL HYDRO POWER (SHP) The world wide definitions for small hdro power are as under : ≤ 5 MW ≤ 10 MW ≤ 25 MW ≤ 15 MW ≤ 20 MW ≤ 20 MW ≤ 25 MW ≤ 50 MW ≤ 50 MW

UK UNIDO India Sweden Columbia Australia China Phillipines New Zealand

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The classification of micro, mini hydro schemes in India is as under : Type Micro Mini Small

Station Capacity Upto 100 Kw 101 kW to 2000 kW 2001 kW to 25000 kW

Unit rating Upto 100 kW 101 kW to 1000 kW 1001 kW to 5000 kW

The classification based on head is defined as under : Ultra Low Head Low Head Medium / High Head

Below 3 metres Less than 40 metres Above 40 metres

The statewise identified small hydro projects upto 25 MW capacity are as under : Sl.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

State Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Goa Gujarat Harayana Himachal Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura UT (A & N Islands) Uttar Pradesh Uttaranchal West Bengal TOTAL -3-

NO. 377 452 40 74 47 4 287 23 288 208 89 221 207 85 221 99 90 53 84 206 122 55 70 155 10 5 211 354 141. 4278

TOTAL CAPACITY (MW) 250.50 1243.47 119.54 149.35 57.90 4.60 186.37 36.55 1418.68 1294.43 170.05 534.76 455.53 336.33 448.50 91.75 197.32 135.93 149.31 217.99 124.22 27.82 214.33 373.46 30.85 1.15 267.06 1478.24 213.52 10265.45

III.

SMALL HYDRO POWER POTENTIAL IN J&K In the State of Jammu & Kashmir, the State Power Development

Corporation (SPDC) is the nodal agency for the development of SHP. The SPDC has developed a number of power projects in the State and has also the mandate of identification of potential sites, preparation of pre-feasibility reports, detailed project reports and execution of such projects. The Corporation has both the infrastructure as well as expertise to handle small, medium and large hydro projects in the State. The power generated from the projects developed by the SPDC is being consumed in the State, for which the State Power Development Department (PDD) has the necessary power evacuation facilities, transmission & distribution network and other related infrastructure in terms of technical manpower etc. The State has a hydro power potential of 20000 MW against which only about 1500 MW have been harnessed so far. The following physical map of the state gives an idea about the available potential in the various river basins of the state.

ENVISAGED POTENTIAL 20,000 MW The National Hydro Power Corporation (NHPC), which is a Central Public Sector Undertaking (CPSU) has the mandate of developing hydro power in the entire country. In the state of Jammu and Kashmir also the NHPC has developed and is developing large scale hydro power projects and the power so generated on these projects is transmitted and pooled in the northern grid of the country, which caters to the electricity demand of the adjoining states of the -4-

country. However the power so imported from the northern grid by the respective states is based on the tariff fixed by the regulatory authority from time to time. For the power generated by the NHPC on the rivers of the Jammu & Kashmir state, the NHPC provides a royalty of 12% of the power generated. Hydro Power Potential The statistics of the hydro potential is as under : S.No

Name of the Basin

1 2 3 4

Jehlum Chenab Indus Ravi Total

Hydro Potential Identified (MW) Developed (MW) 3560 732.60 10360 724.50 2060 8.55 220 9.00 16200 1474.65

The present installations on these basins in the state and central sector are as under :State Sector S. Name of Project No. A 1. 2 3 4 5 6 B 1 2 3 4 5 C 1 D 1 2 3 4 5

Configuration

Jehlum River Basin Ganderbal 2x3+2x4.5 Upper Sindh 2x11.3 Lower Jehlum 3x35 Karnah 2x1 Upper Sindh-II 3x35 Pahalgam 1.5x2 Sub Total Chenab Basin Rajouri 2x0.35 Chenani-I 5x4.66 Chenani-II 2x1.0 Chenani-III 3x2.5 Baderwah 1x1.00 Sub-Total Ravi Basin Sewa-III 3x3 Sub-Total Indus Basin Stakna 2x2 Hunder 2x0.20 Sumoor 2x0.50 Bazgoo 2x0.15 Iqbal Bridge 3x1.25 Sub Total Total -5-

Installed capacity (MW)

Year of commissioning

15.00 22.6 105.00 2.00 105.00 3.00 252.00

1955-56 1973-74 1978-79 1990-91 2002-2003 2005

0.70 23.30 2.00 7.50 1.0 34.50

1960 1971-72 1995-96 2001-02 2005

9.00 9.00

2002-03

4.00 0.40 0.10 0.30 3.75 8.55 304.65--(i)

1988 1994-95 1994-95 1994-95 1995-96

Central Sector 1 Salal HEP

6x115

2

4x120

Uri-I Total Grand Total (i) + (ii)

690.00

345 MW in 1997 345 MW in 1994 480.00 1997-98 1170.00 –(ii) 1474.65

The following new schemes have been taken up for development in the state sector.

S.No.

Name of the scheme

1 2 3 4 5 6

Sawalkote stage I&II Baghlihar-II Parnal New Ganderbal Kirthai Lower Kalnai Total

Capacity (MW) 1200 450 37.50 93 240 50 2070.50

The following new projects have been transferred to NHPC. S.No.

Name of the scheme

1 2 3 4 5 6 7

Kishanganga Uri-II Burser Pakal Dul Sewa-II Chutak Nimoo Bazgoo Total

Capacity (MW) 330 240 1020 1000 120 44 45 2799

The state has added a capacity of 1474.65 MW, both in the state as well as central sector since 1960 and the restricted electricity demand projected for the year 2006-07 is 1635 MW. The details of the capacity addition and the demand profile are given overleaf.

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Capacity Addition from 1960-2002

MW

Capacity Addition from 1960-2002 1500 1400 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 0 1960

1965

1970

1975

1980

1985

1990

1995

2000

Year

Demand Profile Year Self generation Availability from CPSUs Total availability Restricted requirement Deficit Self generation (%)

V.

19992000 69 450

20002001 84 475

20012002 102 475

20022003 88 475

20032004 124 660

20042005 154 660

20052006 154 698

20062007 154 759

519

559

577

563

784

814

852

913

891

965

1015

1139

1279

1352

1427

1635

372 8

406 9

438 10

576 8

495 10

538 11

575 11

722 9

STATE POLICY FOR DEVELOPMENT OF SHP As described above J&K has a hydro potential of 20,000 MW and the

Govt. of Jammu and Kashmir has decided to encourage generation of power through small hydro power sources of energy and has framed a policy so that the development of this sector serves as an engine to achieve the objective of promoting the all-round development of the region. The objectives of this policy, interalia, are to attract investors for the development of State’s water resources in an environmental friendly manner and to generate revenues for the state from development of its hydel resources while ensuring project viability. -7-

The salient features of the policy are discussed hereunder : ¾ J&K Govt invites, Non-Govt Agencies of J&K, termed as IPPs to bid for identified projects. ¾ Pre-qualification and allotment of projects through competitive bidding. ¾ Pre-feasibility reports shall be provided by SPDC to the qualified bidders ¾ Project will be allotted to bidder making the highest bid for premium payable per MW ¾ Projects offered initially for a period of forty years from the date of award. ¾ IPP can sell power to any consumer within or outside the state including J&K PDD. ¾ Power Purchase Agreements (PPAs), sales and wheeling agreements to be mutually negotiated ¾ No wheeling charges in case of sale by J&KPDD. ¾ All sales will be approved as required by the Regulator. ¾ Govt land will be given on Lease to the IPP for a period of 40 years ¾ Free transfer of shares will be permitted in the companies allotted projects as per the laid down procedure. ¾ No royalty shall be charged for first fifteen years for the projects ¾ JKPDD will carry out the implementation of evacuation facilities, if requested by IPPs, at charges to be mutually negotiated. ¾ Developers can avail of the facility of banking of energy with JKPDD ¾ The infrastructure and facilities of J&KPDD will be made available to all IPPs for wheeling the generated energy.

Incentives offered to IPPs ¾ No entry tax will be levied by the State Govt on power generation, transmission equipment and building material for projects. ¾ Small HEPs shall be treated as an industry and few incentives available to industrial units in backward areas shall also be available to these units including toll tax exemption. ¾ Income accruing from micro HEPs shall be exempted from income tax as per Govt of India Policy in vogue for backward areas.

Additional facilities ¾ J&K Govt to offer a support price for a maximum period upto 10 years. However, tariff fixation is the jurisdiction of J&K State Electricity Regulatory Commission (JKSERC). ¾ One pre-qualification bid document will hold good for submission of bids for more than one project ¾ JKSPDC will procure land for non state subject IPPs and others (state subject) if requested by them and lease out the same on payment of premiums and rentals.

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Role of JKSPDC ¾ Basic investigation in the field of hydrology, topography, geology, preparation of PFR and assessing the preliminary techno-economic viability of the schemes ¾ Advertising of the sites and receipt of the bids as per a pre determined criteria for qualification ¾ Award of the project site to the successful bidders in a transparent manner ¾ Monitoring of the project execution ensuring adherence to the prefixed milestones. Sites identified for development The following sites have been identified for development under phase I. Phase-I S.No. Name of the Project

Name of source stream/tributary

District

1.

Aharbal

Vishow

Anantnag

Estimated Capacity (MW) 15.0

2.

Kahmil

Kahmil

Kupwara

3.75

3.

Hirpora

Rambiara

Pulwama

9.0

4.

Naigadh

Naigadh

Doda

6.0

5.

Athwatoo

Madumati

Baramulla

7.5

6.

Ranjala Dunnadi

Upeer Kalnai

Doda

7.0

7.

Tangmarg

Ferozpora

Baramulla

6.0

8.

Mandi

Mandi

Poonch

4.0

9.

Boniyar

Hapatkhai

Baramulla

3.0

10. Brenwar

Doodganga

Budgam

2.0

11. Drung

Ujh

Kathua

2.0

12. Thanda Pani

Thanda pani Tawi Rajouri

2.0

Allotment in respect of these power projects excepting s.no. 4 & 12 have been made to successful IPPs.

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Phase-II S. No

Name of the Scheme

District

River/ Nallah

Envisaged Capacity (MW) 1.85

1

Tulel MHS

Baramulla

Kishenganga

2

Hanswar

Doda

Hanswar

1.30

3

Gulah Garh

Udhampur

Ans

1.20

4

Attal Garh

Doda

Neeru Nallah

2.50

5

Mawar (Nawgam)

Kupwara

Mawar Nallah

4.50

6

Boniyar-I

Baramullah

Boniyar Nallah

2.60

7

Boniyar-II

Baramullah

Boniyar Nallah

1.20

8

Erin

Baramullah

Erin Nallah

3.00

9

Chandanwari Uri

Baramullah

3.00

10

Kanzil Wangath

Srinagar

Chandanwari Nallah Wangath

12.00

11

Srenz Ningli

Baramullah

Ningli Nallah

2.30

12

Nihama (Kulgam)

Anantnag

Vishow Nallah

6.00

13

Aru (Pahalgam)

Anantnag

Lidder

3.75

14

Bringi MHS

Anantnag

Bringi Nallah

3.50

15

Anantnag

Martand canal/lidder Sukhnag Nallah

3.00

16

Martand Canal (Rambir pora) Sukhnag

17

Shaliganga

Budgam

18

Girjan Ki Gali

19

Budgam

16.00

Poonch

Shaliganga Nallah Suran River

15.00

Chingus Stage-I

Rajouri

Nowshara Tawi

1.05

20

Chingus Stage-II

Rajouri

Nowshara Tawi

0.60

21

Thana Mandi

Rajouri

Suran River

4.05

22

Ans Stage-I

Udhampur

Ans River

22.00

23

Bhalla

Doda

24

Nachia

Doda

Bin Kudh / Neeru Nallah Nache Nallah

1.00

25

Pogal garh

Doda

Pogal Garh

1.00

Nallah

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10.50

1.5

VI

CENTRAL GOVERNMENT INCENTIVES /FINANCES AVAILABLE

Ministry of Non-Conventional Energy Sources, Govt of India. In order to provide a greater thrust for speedy development of hydro power sector, the new hydro power policy was announced by Govt. of India (Ministry of Power) in August, 1998, which recognized the role of Ministry of Non-conventional Energy Sources (MNES), Govt. of India in this sector. Accordingly the subject matter of SHP projects upto 25 MWs has been transferred to MNES from Ministry of Power w.e.f. 29th November, 1999. The incentives provided by MNES Govt. of India under its SHP policy 2002-03, interalia, are as under : Detailed Survey & Investigation and preparation of Detailed Project Report 1.75 lacs INR (upto 1 MW)

3 lacs INR (1-10 MW)

5 lacs INR (10-25 MW)

Subsidy scheme for setting up of commercial SHP Projects upto 25 MW station capacity by Private, Joint Sector and others. Upto 100 KW 45% of project cost limited to 30,000 INR/KW

101 KW-999KW 45% of project cost limited to 30 lacs INR + 21625 INR/KW

1 MW-25 MW 45% of project cost limited to 2.25 Cr. INR + 37.5 lacs INR/MW

Indian Renewable Energy Development Agency (IREDA) In addition to the above, IREDA which is the financial arm of the MNES, Govt. of India established to promote, develop and finance renewable energy technologies and provides funding for development of SHP for setting up commercial SHP projects upto 25 MW station capacity by Private, Joint Sector & others on the following financial terms : Term Loan ¾ Upto 75% of project cost (upto 1 MW capacity) ¾ Upto 70% of project cost (1-25 MW capacity) Interest Rate ¾ 11.25% upto 1 MW ¾ 11.50% above 1 MW upto 5 MW ¾ 11.75% above 5 MW upto 15 MW ¾ 12.00% above 15 MW upto 25 MW

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Repayment Period ¾ Maximum 10 years repayment ¾ Maximum 3 years grace period ¾ Quarterly installments Concessions for Jammu and Kashmir I. Rebate in Interest Rate ¾ 0.5% p.a for Grid Connected Projects ¾ 1.0% p.a for Non-Grid Connected Projects II. ♦ ♦ ♦ ♦

50% exemption from payment of following : Legal charges (other than incurred for recovery) Expenditure incurred on nominee Directors Front-end-fee Registration fee.

CONCLUSIONS The J&K State is an economically backward state and primarily because of power shortage is lacking an industrial base. Despite tremendous hydro power potential the state has been reeling under power crisis for a number of reasons. The geoclimatic conditions coupled with the political scenario has taken a heavy toll of the development of the State. It is in this background the State Govt has come up with a power policy which envisages privatization of potential hydro power sites for development through IPPs. The available hydro power potential is easily accessible and with comparatively higher plant load factor provides an ideal situation from investment point of view. The incentives provided by the State Govt and the MNES are expected to attract investors in the development of this sector. At an average a project in hydro power sector assumed to be developed under >0:30 debt equity norm can repay its debt in full in its first ten years besides paying back the entire equity, after which it is virtually a gold mine, liability free with just a nominal operation and maintenance cost of just 1.5% of the project cost. Thereafter it can continue to generate huge returns for a long period. The bounty of nature for the state of J&K is in the shape of white gold flowing from lofty mountain peaks jumping out of the gorges with a loud call to the valiant investors to step forward and invest in techno-economically viable schemes having assured market and more than the required social justification. -12-

It is expected that with the incentives provided by the Central Govt. , easy availability of finances for development of this sector from the concerned Central financial institutions complemented by the recent policy announced by the Govt. of Jammu and Kashmir, the overall development of the state in general and development of small hydro power in particular shall get a fillip. Investors across the board are therefore requested to invest in the power sector of the state and avail the facilities made available by the State of Jammu and Kashmir.

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