Jindal Power to Build 4,500-MW Etalin Hydroelectric Project in Arunachal Pradesh

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Researched by Industrial Info Resources (Sugar Land, Texas)--Jindal Power Limited (New Delhi), a fully owned subsidiary of Jindal Steel and Power Limited (JSPL) (BSE:532286) (New Delhi), recently announced it will construct the 4,500-MW Etalin multipurpose hydropower project with the state of Arunachal Pradesh. The hydropower project will be located on the Dibang River in Lower Dibang Valley. A Memorandum of Understanding to this effect was signed in June. A joint venture between Jindal Power and state-owned Hydro Power Development Corporation of Arunachal Pradesh (HPDCAP) (Itanagar, Arunachal Pradesh) also has been incorporated to oversee the execution of the project. HPDCAP will hold a 26% stake in the joint venture. A detailed project report will be submitted shortly.

Jindal Power presently operates a 1,000-MW super-thermal power plant at Raigarh in the state of Chhattisgarh. Under the Indian government's "Power for All by 2012" plan, Jindal Power is also building a 2,400-MW power plant near its existing plant at Tamnar in Chhattisgarh. The proposed project will cost $2.4 billion. The firm also has signed a Memorandum of Understanding with the government of Jharkhand to construct a 2,640-MW thermal power plant in the state.

The Etalin hydropower project has faced several challenges. NHPC Limited (Faridabad, Haryana), formerly National Hydro Power Corporation Limited, had been expected to undertake construction and implementation of the Etalin project. The project was later awarded to Jindal Power, as the company agreed to offer the state government a 26% stake in the venture.

The project also was delayed because of the tussle between the central government and the hydropower-generating states over advance premium collection. The state governments, including Arunachal Pradesh, were demanding an advance premium in the range of $2,097 to $12,582 per MW, depending on the size of the power plant. The states argued that the revenues were critical to infrastructure development in the region. Last year, the contracts signed with NTPC Limited (BSE:532555) (New Delhi), formerly National Thermal Power Corporation Limited, to develop the 500-MW Attunli and Etalin hydropower projects, were cancelled after NTPC refused to pay the $10,485-per-MW advance premium.

In 2006, the state of Arunachal Pradesh signed agreements with North Eastern Electricity and Power Corporation (NEEPCO) (Shillong, Meghalaya) and NHPC to develop more than 10,000 MW of hydropower projects in the state. Arunachal Pradesh lies in the northeastern region of India, bordering the states of Assam and Nagaland. The state also shares borders with Myanmar, Bhutan and China. The state, which has some of the highest peaks in the country, including the Himalayan range, has a hydropower generation potential of about 50,000 MW.

NHPC, India's leading hydropower-generation firm, is developing six hydropower projects with a combined capacity of 10,000 MW in Arunachal Pradesh, including one with a power-generating capacity of 2,000 MW that is under construction. The other proposed power plants are the Tawang I and II projects, with individual capacities of 750 MW each; the 1,600-MW Subansiri Middle and the 2,000-MW Subansiri Upper projects; and the 300-MW Dibang power plant.

NEEPCO is planning an addition of 800 MW to India's northeast capacity, including the Pare hydropower project in Arunachal Pradesh.

Reliance Power Limited (BSE:532939) (Mumbai) has signed a Memorandum of Understanding with the state government to build four hydroelectric plants with a combined capacity of 2,520 MW. Reliance Power, which secured the contracts through a competitive bidding process, will develop the 500-MW Emini, 400-MW Mihundon, 1,200- MW Kalai II, and 420-MW Amulin power projects, all to be located in Dibang Valley. The company is already constructing the 1,000-MW Siyom hydropower project on the Siyom River, and the 700-MW Tato II project in Dibang Valley. Both are expected to be commissioned by the end of 2012.

In 2006, the power division of Jaypee Group (BSE:532532) (New Delhi) signed two agreements with the state, which will provide the company with a 40-year concession to develop the 500-MW Hirong and 2,400-MW Lower Siang hydropower projects. Both will be built on a build-operate-own-transfer model. A special purpose vehicle (SPV) also has been established for the project, with the state government owning an 11% stake in the SPV. The Lower Siang power project will be completed by 2014, while the Hirong project is expected to begin operations in 2015.

Hydropower generation is receiving renewed focus in India. The country, which depends primarily on fossil fuel for electricity generation, is taking steps to develop renewable and alternative energy sources. In the past 20 years, the contribution of hydropower to the country's energy grid has declined from 40% to 25%. India's total installed power generation capacity is around 147,402.81 MW, of which hydropower accounts for 36,647.76 MW.

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