The Chinese connection of hydro power policy

NEW DELHI: As the ministry of power finalises a new hydro power policy, moving away the tariff-based competitive bidding regime, it would seem that Arunachal Pradesh has won the round for the states. It is not difficult to picture Arunachal Pradesh as the leader of the pack. After all, it���s the state with the maximum hydro-power potential.

Of the 1,50,000mw of country���s hydro power potential, Arunachal Pradesh accounts for 50,000mw. Besides, it was Arunachal Pradesh chief minister Geong Apang���s insistence on adopting methods other than tariff-based bids that in a sense forced the Centre to rethink its hydro policy.

Mr Apang may get a lion���s share of the credit, but fact is that all states with exploitable hydro power potential have been charting their own course when it came to awarding projects. Uttarakhand adopted the system of premium bids, as did Himachal Pradesh, Sikkim had its own system.

But even this is only one part of the story. While not denying Mr Apang���s persuasive powers, or Mr Shinde���s desire to develop hydro power or even the need to find ways to satiate the country���s appetite for cheap power, it would not be incorrect to say that it was China that turned the tide.

China���s move to develop/divert the Siang river basin in the Tibet area to provide water for its parched regions, resulted in a sense of alarm for New Delhi. After all, if China on the Tibetan side were able to affect changes the flow of the river into Arunachal Pradesh it could put an end to 50,000mw of hydro power.

In a sense it was the realisation of Arunachal Pradesh���s strategic importance that turned the tide. As former foreign secretary Shyam Saran put it, ���Hydro power in Arunachal Pradesh is more than just about energy, it is about security. Arunachal Pradesh is an important and strategic state. We should do whatever we can for its economic development and integration with the rest of the country.��� The former foreign secretary has suggested that there is a need to work out a plan that will address the country���s need to develop the hydro power as well as benefit the state. ���Wake up and look at the strategic point of view,��� said Saran.

China is working on a number of projects in Tibet. If these plans are put into action, it could affect the flow of the river into India. However, given the concept of ���exisisting uses��� in international law, usage in the lower riparian can���t be harmed by developments in the upper riparian.

To put it differently, were India to develop its river basin in the region, the China wouldn���t be able to implement projects that would affect the the projects in India. The fact that India doesn���t have the luxury of time to force states like Arunachal Pradesh to toe the line when it came to awarding hydro power projects seems to be a crucial factor leading to the new hydro power policy. As Mr Shyam Saran puts it, ���we shouldn���t waste time quibbling over percentage of free power. We need to work hard to catch up. There is a 10 to 15 years time frame to develop resources.���

This could explain why it took the power ministry almost five years to acknowledge the need to move away from a tariff-based competitive bidding system for hydro-power to a cost-plus regime. In July 2002, the ministry of power set out guidelines stating that projects above 100MW be awarded through competitive bidding. The Electricity Act, 2003, National Electricity Policy 2005 and Electricity Tariff Policy 2006 further reinforced this.

The power ministry has its own explanation for this change in policy. ���Developers will bid competitively for tariff only when full details are available. Detailed project reports for hydro projects require time and sizeable investments. A reliable DPR would require at least two to three years and an expenditure of Rs 20 to Rs 50 crore,��� said a senior power minsitry official.

According to the ministry, this is the reason why the new hydro policy will suggest that tariff for hydro power projects be determined on the basis of cost and norms of performance. All this may be part of the reason behind the rethink. However, given the timing, China���s role may be difficult to deny.