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Saturday, July 18, 1998

What the ministry never told Ranga

Sunil Jain  
It's not too difficult to feel sorry for power minister Rangarajan Kumaramangalam these days. For one, he's obviously still smarting from the fact that it's been over two months since he announced that counter-guarantees would be issued for three fast-track power projects soon, but no final solution appears to be around the corner. And apart from the debacle over the power regulatory authority bill, he's probably sore about the fact that while he goes around berating private producers for delaying projects and charging inflated prices, his own ministry doesn't appear to be telling him too much about what's happening either.

So poor Ranga is allowed to go and cut a sorry figure when he keeps saying that Indian private power producers are charging too much for their power and cites the example of the Haripur Project in Bangladesh which will supply power at around three cents (Rs 1.3) per unit. What he doesn't know is that Haripur will be getting natural gas at around half the price it is in India, that therewould be no import duty on equipment while this is around 25 per cent in India, or that Bangladesh gives a 15-year tax holiday as compared to five in India. An excellent breakdown of each such component has been provided in the magazine Power Line recently. The magazine's calculations, in fact, show that if the same project was set up in India, the overall costs would go up by around 80 per cent.

Nor, it would appear, is the minister made aware of the full dimensions of what's happening in terms of the huge time and cost overruns in public sector projects. An excellent example is the explanation given by him a few months back when The Indian Express did a story on the ministry's inability to utilise half the funds specially allotted to it for three power projects last year Nathpa-Jhakri in Himachal, Tehri in Uttar Pradesh and Dulhasti in Jammu. Briefed by his bureaucrats, Kumarama-ngalam said the fault wasn't that of his ministry, but that the money had been given to them only in January, by whichtime it was too late to spend it. The fact, however, is that the funds were sanctioned well in time, by April or May last year, and the problem was in fact the tardy progress of the projects.

Interestingly, while the ministry line is that the Sunderlal Bahuguna movement has been responsible for the delay in executing the Tehri project, for instance, the real reason is quite different. The CAG raised an audit objection to the project's funding the UP government has not given its full contribution for the money spent on the project so far which has still not been resolved.

Nor, it would appear from the way Kumaramangalam confidently spoke to the Chandigarh press corps a few days back, that he's fully aware of what's happening on hydro-power projects in the region such as Chamera-II, Kol Dam and Parwati. He told the press that the 300 MW Chamera II, for example would come up in 5-6 years. That, however, will happen only after it is cleared, but that's no-where near happening.

Chamera-II, ironically, isnow increasingly called Chimera, given its history of misadventures and the fact that it is nowhere near coming up. In 1992, the Canadians who had financed Chamera-I through external assistance, offered to finance stage-II on a turnkey basis, especially since funds from stage-I were still left over and valuable equipment still remained. The government sat on this proposal for over two years and finally, in 1994, decided to go in for bids instead. What followed was plenty of bad blood, with the Canadian Prime Minister writing a nasty letter to the government alleging that the tenders had been evaluated incorrectly to show that the Indo-Canadian joint venture bidder, JPIL, had quoted a higher price than the Swedish consortium SMC-Lavalin.

Fresh bids were called in 1996, and the Indo-Canadian joint venture was found to be lower. The project, however, was never awarded and, late last year, the state-owned NHPC offered to complete it. But since the Central Electricity Authority (CEA) had cleared the project at avastly lower cost of Rs 1,460 crore, even this proposal wasn't cleared. Meanwhile, equipment worth around Rs 100 crore from stage-I continues to rot at the site, apart, of course, from the fact that the project's costs keep shooting up.

Talk on the Kol Dam project has been going on since 1982 when the Russians first promised assistance. Several years after this fell through, an MoU was entered into with the Vardhman Group, but nothing materialised eventually and last discussions were held several years ago. As for the 2,500 MW Parwati project, an MoU was signed between the governments of Rajasthan, Haryana, Gujarat, Himachal Pradesh and Delhi in early 1993 to share costs as well as power, but nothing happened once Shanta Kuamr left the chief minister's job. CEA clearance has now been got for stage-II alone (550 MW), but here too, no environment clearance has been got.

With so little done on any of these projects, where's the question of any of them coming up in the next five years or so, as Kumaramangalamtold the Chandigarh press corps? The point: is Kumarama-ngalam being misled or kept in the dark by his ministry on all these issues, or is that he doesn't want to know, preferring instead to just grandstand? It would be nice to know.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.


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