NTPC’s hydel foray: Siang project is a bold move but calibrated execution needed

Reports say that NTPC, India’s largest power producer, plans a massive 10,000 mw hydel project in Upper Siang district, Arunachal Pradesh. Given that hydroelectricity is renewable energy, and further that the thermal to hydro mix has declined and fallen in recent years, the proposal to build an ultra-mega hydel project is to be cautiously welcomed, given the pitfalls and risks involved in planning so large a project in a remote border region. Tentative estimates suggest that the project would cost Rs 1,00,000 crore, and project implementation would stretch to a decade.

Sound project management would be a key requirement; otherwise, project delays could shore up costs and make it unviable and uneconomic. And since such a large hydel project has never been attempted in the subcontinent, it may make sense to hive off the whole project into two or three modules, so as to keep better tab on costs and aid implementation.

The north-east’s hydel potential is estimated at over 50,000 mw, of which a tiny fraction has been tapped. Given the steep gradient in what is a water-rich region, the north-east is well suited for hydel capacity with minimal storage and associated environmental costs. It would also make sense to step-up hydro capacity in neighbouring countries like Bhutan (estimated potential of 30,000 mw) and import power. India has committed to draw 10,000 mw from Bhutan by 2020. Yet the reality on the ground is that the 1,020 mw Tala hydroelectric is the only functional Indo-Bhutan joint venture, although the 1,095 mw and 990 mw Punatsangchhu I and II projects are underway.

Meanwhile, NTPC’s Siang project would be pathbreaking in scale and scope. With its current installed base of 34,000 mw, NTPC remains focused on thermal generation. The power major is already implementing hydel projects totalling 1,700 mw in capacity addition; its 800 mw Koldam hydel project in Himachal is slated to start generation next year. It may make sense for NTPC to separately list the Siang project while under implementation, so as to unlock shareholder value in good time, and also to keep a tab on project implementation and attendant costs with the investing public actively involved.