Sikkim's Hydel Sell-off

The state is flouting every law and risking the future of its people to allow dubious private players a free run

 Tehelka, 11 October, 2013
On its website, the  Energy and Power department says that the state’s swift rivulet systems have huge hydropower potential — “8,000 MW peak with a firm base of 3,000 MW”. With a liberalised power policy and the opening up of this sector to private developers, it claims, “ is poised to gain in a big way”.
We have heard this sales pitch elsewhere. Other Himalayan states — particularly Arunachal Pradesh (Another Disaster in the Making, Volume 10 Issue 28) — are also chasing the ‘hydro-dollar’ dream. But ’s desperation is singular. Here, the authorities are not only bending the regulatory framework, but, for certain projects, have altogether bypassed it.
This May, the  (NBWL) chaired by the prime minister sent a team to inspect the 520 MW Teesta IV project that had applied for wildlife clearance. In its report to the Ministry of Environment and Forests (MoEF) this August, the team drew a parallel between some hydel projects of  and iron ore mines of Goa and quoted the Justice Shah Commission report to underline how “approvals have been granted… in the eco-sensitive zones without placing the project proposals before the NBWL”.
Following a 2006 Supreme Court order, all projects within 10 km of national parks and sanctuaries must seek prior clearance from the NBWL standing committee. The inspection team, however, stumbled upon the construction sites of two hydel projects — the 1,200 MW Teesta III near Khangchendzonga National Park and 96 MW Dik Chu next to Fambonglho wildlife sanctuary — for which NBWL clearance had never been sought.
The  government stonewalled queries but based on available records, the NBWL team concluded that “with the notable exception of the Teesta IV project, none of the other projects… appear to have sought/obtained this compulsory SC-NBWL clearance”. Apart from Teesta III and Dik Chu, at least two other hydel projects in the Teesta basin — Panan and Tashiding — have ducked NBWL scrutiny. The list would have been longer had the Ting-Ting and Lethang projects not been scrapped in February 2012.
In its report, the NBWL team said it could not ascertain the status of many other proposed/ongoing hydel projects situated close to sanctuaries and national parks and asked the MoEF to investigate why such widespread violation of the SC order took place, suspend work on the illegal projects, and punish the guilty. The ministry sat on this report for a month before putting it up on its website.
On the Teesta IV project, the NBWL team urged the standing committee not to consider the developer’s request for clearance separately, but treat it as part of a larger set of hydroelectric projects in the Teesta Basin. The report listed the existing and proposed tunnels — Teesta III (13 km), Teesta IV (11 km), Teesta V (17 km) and Teesta VI (11 km) — to point out the grave cumulative impact on the river’s ecology.
Coming after the devastating Uttarakhand floods, the report expressed deep concern about such large-scale manipulation of mountain river systems against “all reasonable scientific advice”. As recently as on 3 October, a noontime tremor hit . It recorded 5 on the Richter scale but what scared the residents more was the location of its epicentre: near the NHPC dam site of Teesta V in Dik Chu at Sangtok in North.
But safety is not the only concern. Buddhism was introduced here in 749 AD by Guru Rinpoche, who compiled the holy scripture Lama Gongdue in Tashiding by the Rathong Chu river that passes through 109 sacred lakes (Tsos). Now, a 97 MW hydel project is coming up where the ceremony of Bhum Chu (Holy Water Vase) is observed in the first month of the Buddhist calendar every year.
“If we don’t follow Dharma, if we destroy cliffs and rocks, if we dig up the land, plunder the trees and change the course of rivers, we will face the consequence,” warns Tseten Tashi Bhutia, convener of the  Bhutia-Lepcha Apex Committee, which moved the court after the Tashiding project obtained environmental clearance in 2010.
In May 2012, the SC  referred two writ petitions to the  High Court. Around the same time, the MoEF woke up to the fact that the project had not obtained clearance from the NBWL and asked the state to immediately stop construction work at Tashiding until further orders. But nothing stopped project developer Shiga Energy from carrying on.
This April, the HC reiterated that the project’s fate depended on the final outcome of the petition and that the project developer was “continuing the works at its own risk”. The promoters claimed they have already spent Rs 260 crore borrowed from public institutions. The court will soon take a final decision if it is too late to call off this illegal project.
The course was charted in 1974 by the Central Water and Power Commission that proposed “cascade development” to harness the hydel potential of the Teesta and Rangit. By 1990, the National Hydro Power Corporation (NHPC) stepped in. In 1999, under pressure from the power ministry, the Teesta V project was cleared on the condition that none of the other five cascade projects would be considered without studying the river’s carrying capacity.
The study was commissioned by the NHPC in 2001 and the Centre for Inter- Disciplinary Studies of Mountain and Hill Environment submitted its report in 2007. By then, all six projects on the Teesta had been given preliminary clearances in violation of the MoEF own conditions.
The floodgates were thrown open soon after the Central Electricity Authority ranked the hydroelectric potential of key rivers in 2001. The emphasis was on the Brahmaputra basin, which included the Teesta. Since 2002,  has proposed 31 hydel projects. Between January and June 2012, under public pressure mounting since the 2011 earthquake, the state cancelled six of these (Ting-Ting, Lethang, Bop, Bhimkang, Lachung and Teesta Stage-I).
Of the remaining 25 projects, only two — the 60 MW Rangit III and 510 MW Teesta V — are operational today, both run by the NHPC. So much for opening the power sector to private developers. But before rushing to blame green ‘red tape’ or local religious sentiments, consider these:
• Central guidelines require all hydel projects above Rs 100 crore to be awarded through competitive bidding except for joint ventures in which the state holds a majority stake. Soon after he was re-elected in 2004, CM Pawan Chamling set a 100- day deadline for signing MoUs worth 3,000 MW and decided that the state would take 26 percent equity — a minority stake — in projects proposed by independent power producers (IPP)
• After diluting the Central guidelines, the  government further compromised its interest. It signed the mou for Teesta III in July 2005 but did not hold a single share in Teesta Urja Limited (TUL) for seven years. The state raised the issue only in 2012 and tul, despite being a private enterprise, went on to obtain sundry government clearances and raise Rs 4,560 crore from government financial institutions (FIs) illegally
• TUL was no exception. Prodded by the power ministry, which was pushed to look into the matter by the Parliamentary Accounts Committee, the  government asked 27 private developers for company details. None of them replied and, subsequently, fended off RTI queries as private limited companies. Clearly, none of these operates as joint ventures
• Rules are there in  for bending. For example, Cosmos Electric Supply, promoted by former ITC chairman KL Chugh, and not Athena Advisors, was the initial choice for the Teesta III in October 2004. Only when T Nagendra Rao, a director in Cosmos, inexplicably demanded some concessions, the project was awarded to Andhra Pradesh Genco-Athena Consortium in February 2005 and TUL was formed. At present, Singapore-based Asian Genco, set up only in 2007 and run by TV Vijaykumar (an aide of former AP CM the late YS Rajasekara Reddy), holds 50 percent stake in TUL.
Rao turned a promoter himself. In 2008, the state Cabinet decided to withdraw a Letter of Intent (LoI) issued to him in 2006 due to his “dubious credentials” and yet Rao eventually landed multiple projects. ’s Hyderabad connection runs deep. YSR’s son Jaganmohan Reddy’s Sandur Power sold shares to the Lanco group (Teesta VI). He also picked up stake in Teesta V through Navayuga Engineering. Jagan’s wife Bharathy has stake worth Rs 4 crore in and virtual control of Himurja Infra (Teesta II)
• Companies changed names and holdings overnight to bag hydel projects. For example, UVJ Marketing became Shiga Energy but it was awarded the Tashiding HEP before the new company was incorporated. DANS IT Systems was renamed DANS Energy but the company was issued the the LoI for the Jorthang project before “power generation” became one of the objectives in its memorandum of association. Both Shiga and DANS floated by Nagendra Rao had Rs 1 lakh paid-up capital when they were awarded projects worth Rs 466 crore and Rs 403 crore respectively
• One of the standard clauses of the hydel MoUs, points out Dawa Lepcha of Affected Citizens of Teesta, states that one member of each family affected by land acquisition for the project will get employment which “shall cease immediately on completion of construction of the project”. No wonder most locals are opposed to these projects.
• For any delay in project implementation, the quantum of penalty is usually linked to the loss of projected royalty. But  levies a standard fine of just Rs 10,000 per MW per month. This meagre penalty, described by a Comptoller & Auditor General (CAG) report as arbitrary, is a prime reason why IPPs seldom care for deadlines.
• From earning Rs 1,500 crore annually from its hydel projects by 2015,  has “rationalised” the annual revenue target to Rs 900 crore this year. Already, the state has borrowed Rs 600 crore from the Power Finance Corporation to fund its 26 percent stake in Teesta III, IV and Rangit IV. It needs to borrow at least Rs 300 crore more to fund equities in other projects.
But delay and cost overruns are making hydels in the state very expensive. The project cost of Teesta III, for example, has gone up to Rs 8,353 crore from Rs 5,700 crore due to damages suffered in the 2011 earthquake. The 2008-09 CAG report noted that “delays in project completion by developers have resulted in a loss to the state exchequer… (of ) Rs 2,514.49 crore to Rs 2,622.76 crore per annum”. Forget revenue, Chamling has given his state a few white elephants.
“This hydel scam can cost  over Rs 50,000 crore. Instead of setting realistic targets, a nexus of politicians, bureaucrats and promoters just made money. Today, our people are becoming minorities at home, losing cultural space and facing frequent landslides, floods and tremors. The CM’s trusted forest officers, particularly those deputed to non-forest departments, are much to blame for this mess,” rues a retired IFS officer.
The state’s anti-dam activists are pinning their hopes on a string of PILs in the HC. And, they are waiting for the CBI to reach  following Jagan’s investment trail and put the Chamling government under the scanner.
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