India's NHPC to Form Joint Venture with Orissa for Hydropower Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--NHPC Limited (Faridabad, Haryana) is set to enter into a 51:49 joint venture with Orissa's government to set up hydropower projects in the state. The firm plans to sign a memorandum of understanding with the government to develop, maintain and repair power plants. NHPC has already submitted a preliminary draft proposal to the government. Details of the joint venture pertaining to power-sharing modalities and financial aspects will be discussed later.

In January, NHPC submitted a draft memorandum to Orissa for a proposed joint venture with state-owned Orissa Hydro Power Corporation Limited (OHPC) (Bhubaneshwar, Orissa) to develop a 900-megawatt (MW) hydropower plant on the Mahanadi River in Sindol in the Subarnapur District. NHPC proposed to deliver 12% of the total power generated for free to the state. About 87% of the power generated would be sold to the state based on a tariff recommended by the Orissa Electricity Regulatory Commission (Bhubaneshwar). About 1% of the profit generated from the project will be used for peripheral development.

The government directed WAPCOS Limited (New Delhi) to submit a detailed project report for the Sindol power plant. The project, comprising three 300-MW units, will not require a reservoir, eliminating the need to displace anyone living in the region. WAPCOS is a state-owned consultancy services provider in the infrastructure, power and water sectors under the aegis of the Union Ministry of Water Resources.

In February, NHPC announced plans to set up a 51:49 JV with OHPC to set up 12 hydropower projects in Orissa with a total investment of $2 billion. The proposed projects include the Balijori hydropower project, the Baramul hydropower project, lower Bansadhara, the Khadago dam project, middle Kolab, the Mahanadi-Brahmani river link, the Salki hydropower project, Sindol-I, Sindol-II and Sindol-III hydropower projects, the Tel integrated project, and the Uttei Roul integrated project. Each of these projects will have a generating capacity of more than 25 MW and will be financed in a debt-to-equity ratio of 70:30. Upon commissioning in 2011-12, the projects are expected to make Orissa self-sufficient in power generation.

NHPC is also looking to tap into the hydropower potential of northeastern India by setting up projects of more than 10,000 MW in the region with a total investment of $10 billion by 2022. Northeastern India accounts for 60,000 MW of the country's total hydropower potential of 150,000 MW. NHPC plans to commission the fifth unit of the Teesta hydropower plant in Sikkim by December 2009. The 132-MW unit is one among six hydropower units being developed on the Teesta River in eastern Sikkim. The annual power generation from Teesta-V is estimated at 720 million kilowatt-hours (kWh).

Another hydropower plant that will be commissioned by NHPC by the end of this year is the 120-MW run-of-the-river Sewa-II power project in Jammu Kashmir. The annual power generation from the Sewa-II unit is estimated at 533.52 million kWh. The Teesta-V and Sewa-II hydropower projects will add 250 MW to the firm's existing installed power generation capacity of 5,175 MW.

NHPC has made capital expenditure plans of $5.6 billion during the ongoing Eleventh Five-Year Plan period, 2007-12. The firm has already secured $1.3 billion from Life Insurance Corporation of India (New Delhi) and $800 million from Power Finance Corporation Limited (BSE:532810) (New Delhi) to fund its proposed power projects.

In another development, the 1,530-MW Nathpa Jhakri hydropower plant, the largest hydropower project in India, achieved a record power generation of 6.61 billion kWh in 2008-09. Satluj Jal Vidyut Nigam Limited (SJVNL) (Shimla, Himachal Pradesh), which operates the Nathpa Jhakri power plant, entered into memorandum of understanding with Power Secretary V.S. Sampat to produce 6.6 billion kWh of power in 2009-10, generating revenues of $287 million.

SJVNL is a 75:25 joint-venture entity set up by the Indian government and the state government of Himachal Pradesh. The Nathpa Jhakri power plant, comprising six 225-MW Francis turbines, was developed over a period of 15 years on the River Satluj with a total investment of nearly $2 billion.

Eucona, a consortium comprising ABB Limited (NYSE:ABB) (Zurich, Switzerland), Kvaerner ASA (Oslo, Norway), a subsidiary of Aker Solutions ASA (OSL:AKSO) (Lysaker, Norway), Siemens AG (NYSE:SI) (Munich, Germany), and Sulzer Escher Wyss AG (Zurich, Switzerland), supplied equipment for the power plant at a total cost of $200 million. Alstom SA (EPA:ALO) (Levallois-Perret, France), through its power transmission and distribution division, supplied two gas-insulated substations of 420 kilovolts each, the largest installed in the country.

The plant commenced commercial operations in September 2003. Power generation from the facility increased from 4.1 billion kWh in 2005-06 to 6.02 billion kWh the following year and further to 6.45 billion kWh in 2007-08. The power project generates about 38 million kWh of power per day, which is supplied to the states of Chandigarh, Delhi, Jammu and Kashmir, Punjab, Haryana, Himachal Pradesh, Rajasthan, Uttarakhand and Uttar Pradesh.

In another recent development, HCC secured a construction contract worth $137 million for the 1,200-MW Punatsangchhu-I hydropower project on the Punatsangchhu River in Wangdue Phodrang Dzongkhag in western Bhutan. HCC will construct the headrace tunnel, tailrace tunnel, surge shaft, pressure shafts, butterfly valve chamber, and powerhouse for the project. The firm will also undertake hydromechanical work. HCC is scheduled to execute the contract within a period of 66 months. The Punatsangchhu-I project is one among 10 hydropower plants being developed in Bhutan in collaboration with India.

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