India Weighs Compensation for NTPC after Ending 600-Megawatt Hydropower Project in Uttarakhand

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Researched by Industrial Info Resources (Sugar Land, Texas)--Environmental concerns and resistance from religious groups have forced the Indian government to scrap the $622 million, 600-megawatt (MW) Loharinag Pala hydropower project on the Bhagirathi River in Uttarakhand. The Bhagirathi is one of the main tributaries of the Ganges River. The decision was made after a committee consisting of Finance Minister Pranab Mukherjee, Minister for Environment and Forests Jairam Ramesh, and Minister for Power Sushil Kumar Shinde recommended cancellation of the project. Recent reports indicate that the government may compensate NTPC Limited (BSE:532555) (New Delhi) for expenses incurred in the construction and development of the project.

According to Shinde, a technical panel suggested measures to protect the environment and maintain the geological balance in the region. NTPC, which proposed to construct four units of 150 MW each, began construction in 2005, but then stopped building activities. In 2009, construction ceased indefinitely. Jairam Ramesh indicated the project was scrapped to ensure a free flow of water from the river.

Religious groups have been protesting the construction of the Loharinag Pala project, claiming that the dam on Bhagirathi River would obstruct "Aviral Jaldhara," or a free flow of river water, and eventually pose a threat to the existence of the river. The 1,560-kilometer Ganges Rivers is one of the largest and holiest rivers in the Indian subcontinent, and it rises in the Western Himalayan region of Uttarakhand. Environmental groups also are concerned that hydroelectric power projects and dams would lead to the diversion of the Ganges into tunnels and eventually cause the river to disappear in the valley. With nearly 12 new dams planned between Gangotri and Haridwar, agencies have warned that there will be no free flow of the river for about 250 kilometers.

Environmentalists and action groups have lauded the decision to scrap the project. Madhu Kishwar, a senior fellow at the Center for Studies of Developing Societies (New Delhi), has called the government's move "a small step in saving the Himalayan ecology."

Earlier, two other projects on the Bhagirathi were cancelled: the 381-MW Bharion Ghati and the 480-MW Pala Maneri power plants, which were being developed by Uttarakhand Jal Vidyut Nigam (Dehradun, Uttarkand). In the background of these projects not seeing the light of the day, Chief Minister Ramesh Pokhriyal Nishank of Uttarakand has demanded that the Ministry of Power should provide free electricity to the state.

Under the Environmental Protection Act, the federal government is also proposing to declare the 135-kilometer stretch between Gomukh and Uttarkashi as an eco-sensitive zone. When it is implemented, power projects and other industrial development will be banned in the area. Early this year, due to environmental reasons, the state government decided to close Gomukh to tourists.

NTPC already has spent $150 million on the project, and another $430 million has been locked in orders and supply contracts. In 2006, contracts were awarded and construction commenced. The Loharinag Pala hydropower plant is among the several other projects planned by Nepal, India, Bhutan and Pakistan on the foothills of the Himalayas. On completion, these projects are estimated to add 15,000 MW of power.

NTPC, which has a power generating capacity of 32,194 MW, is the biggest energy utility in India. By 2032, the company's target is to increase its electricity generating capability to 128,000 MW. Of this, gas-fired plants are likely to contribute 16%. Recently, citing that earlier bids for the 171-MW Lata Tapovan hydroelectric power project in Uttaranchal were too high, NTPC announced that it would invite fresh bids for the project. Sources indicate that the quotes were nearly 40% higher than the estimated cost of $144.5 million. The project had received bids from several companies, including Gammon India Limited (BSE:509550) (Mumbai), Larsen &Toubro Limited (BSE:500510) (L&T) (Mumbai) and Hindustan Construction Company Limited (BSE:500185) (HCC) (Mumbai). Presently, NTPC is constructing the 800-MW Koldam hydroelectric power project on the Sutlej River at Bilaspur in Himachal Pradesh, and the 520-MW Tapovan Vishnugad hydropower project on the Dhauliganga River in the Chamoli district of Uttaranchal.

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