Risk management in NE hydropower development

The approval by the Union Cabinet for providing Central Financial Assistance (CFA) to the state governments in the Northeast region to facilitate their equity participation in the development of hydroelectric projects (HEP) is a major policy push for hydropower generation in the region. Addressing environmental concerns, dam safety, and downstream concerns will be critical to the sustainability of hydropower development in the region. The CFA will encourage the state governments in the region to pick up equity in HEPs through joint ventures between state entities and central public sector undertakings. The scheme, with an outlay of Rs 4,136 crore, seeks to support the development of cumulative hydropower capacity of about 15,000 megawatts over the next seven years. The central government hopes that with equity participation of the state governments, the problems of long delays in HEP execution can be overcome. It argues that with the participation of the state governments, risk and responsibilities shall be shared in a more equitable manner, and issues of land acquisition, rehabilitation, and resettlement, law and order would be reduced. The central government attributes the time and cost overrun of the HEPs to these issues in the region. The Ministry of Power will mobilise the required fund for the scheme through 10% Gross Budgetary Support (GBS) for the region from the Ministry’s total annual budgetary outlay. The equity portion of the state government will be capped at 24% of the total project equity, subject to a maximum of Rs 750 crore in each project, but the government can revisit the cap, if required on a case-to-case basis. The central government has clarified that that CFA would be limited to only viable HEP, and the states would be required to waive or stagger free power or reimburse the State Goods and Services Tax to make the project viable. This condition renders the policy of compensating the states in which a project is developed by way of 12% of free power infructuous. Arunachal Pradesh has been pinning hopes on its share of free power from HEPs to give development activities in the state a big push. Because of its enormous hydropower potential, estimated to be 58,000 MW, which is about 40% of the country’s total hydropower potential, Arunachal Pradesh is the target of power developers and policy planners. The installed hydropower capacity of the state had increased from 405 MW in 2015-16 to 1270 MW, which has made it a power surplus state. Official data shows that three major HEPs, Panyor Lower, Pare, and Kameng, collectively contributed Rs 1,183 crore worth of free power to the state over the past seven years, while the 600 MW Kameng HEP alone contributes Rs. 123 crore worth of free power annually to the state. Arunachal Pradesh dreams to be the state in the country with the highest per capita income in the country after commissioning of 13 stalled mega hydropower projects totalling 12,723 MW that involve massive investment to the tune of Rs 1.4 lakh crore. The state signed agreements with four Central Public Sector undertakings to revive these stalled projects and expects to generate an annual revenue of Rs 10,000 crore, which includes Rs 3,500 crore worth of free power annually to the state. It remains to be seen how the new CFA and condition of state waving or staggering free power impact these calculations. The development of HEPs has gotten a renewed push by the Ministry of Power to meet its target of developing 500 gigawatts of renewable energy by 2030. Resettlement and rehabilitation of project-affected people is a critical component in the development of HEP. For projects developed in inter-state rivers like the northern tributaries of the Brahmaputra in Arunachal Pradesh, addressing downstream environmental concerns and loss of livelihoods in Assam is a prime concern. Lessons must be learnt from the catastrophe in Sikkim caused by the Glacial Lake Outburst Flood in Sikkim and massive landslides washing away hydropower projects and power stations to take adequate measures for dam safety and downstream concerns. Development of large hydropower projects in the region got renewed push in 2019 after the central government categorised large hydropower projects as renewable energy projects. This change in definition, however, does not remove the inherent risks of environmental damage, displacement of people, and downstream impact. The CFA scheme needs wider stakeholder consultation to allay apprehensions over large HEPs and for sustainable hydropower development in the region. The risk management with respect to HEPs in the region is crucial due to the fragile ecology of project areas and the cascading impact of large projects in ecosystems that spreads across state boundaries and impacts life and livelihoods beyond project areas. Climate change impact mitigation needs to depend on clean energy like hydropower, but a cautious approach is necessary to ensure that the development of clean energy does not result in adding to climate change woes.