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Full Development of Indian Hydro Potential requires resolution of critical issues, Shri R V Shahi, Former Secretary, Ministry Of Power

Full Development of Indian Hydro Potential requires resolution of critical issues
[R V Shahi's Weekly Column for Infraline, September 24, 2007]

The Monthly Round Table organised by Infraline Energy and IDFC on 5th September, 2007, deliberated on all the issues, including required policy changes, to enable full exploitation of hydro electric potential in the country. There were three lead presentations - by Central Electricity Authority, Central Water Commission and the Energy Resource Institute (TERI). This was followed by a number of questions, comments and observations. Important issues highlighted include the following :

  • While there is no Water Act in the country, Electricity Act 2003 makes a specific provision and a distinctly different dispensation for development of hydroelectric projects. Keeping in view the need for safety of large Dams and also the requirement of an integrated approach toward irrigation, flood control and electricity generation through hydro energy, the Act provides for concurrence of the schemes of certain types by the Central Electricity Authority (CEA). Though Electricity Act 2003 has fully delicensed generation of power, and therefore no permission is necessary for setting up power projects, only in respect of hydro schemes involving certain capital investments, the concurrence of CEA has been made obligatory.

  • Water is a State subject and, therefore, it is necessary that state governments allow putting up of power projects for which the project development agencies enter into agreements with States. This requirement, in the recent years, has proved to be a hindrance in so far as expeditious implementation of hydroelectric projects is concerned. A number of states have started evolving their own procedures and in many cases laying down their own conditions before allowing the project development agencies to proceed with the process of investigations and DPR preparations followed by project execution.

  • In the present global context of climate change concerns and the requirements for mitigating global warming issues, the need for developing power generation capacities through exploitation of hydro potential is not only getting reaffirmed but gaining wider acceptance throughout the world. The limited resources of fossil fuels coupled with the environmental ramifications have been responsible for global realization that all such sources of energy which can lead to substitution of generation through fossil fuel or reduce carbon dioxide emissions must be encouraged.

  • India and China have been engaged in massive electricity generation capacity addition programmers. Both these countries have depended, and will perhaps continue to depend, on Coal as the primary fuel for power generation. Obviously, therefore, power development programmes in these two countries are being watched with interest, with caution and with concern. It is, therefore, inevitable that India takes all possible steps to see that maximum amount of electricity generation is made possible by exploiting all its hydro potential. So far, we have been able to develop only about 35,000 MW of capacity. The estimated potential is more than 1,50,000 MW. Thus the exploitation has been only to the extent of about 23% and the balance about 77% remains unexploited.

The following Table highlights the potentials in different parts of the country and the extent to which they have been developed:

Region Potential (MW) Harnessed (MW)
Northern 53,395 12,671
Western 8,928 6,744
Southern 16,458 10,646
Eastern 10,949 2,599
North-Eastern 58,971 1,116

Major potentials yet to be developed are in North Eastern and other Himalayan States:

Region/State Potential Harnessed
North East 58,971 1,116
Himachal Pradesh 18,820 6,086
Uttrakhand 18,175 2,752
Jammu & Kashmir 14,146 1,864

  • In the recent years, particularly in the 10th Five Year Plan major steps have been taken. The 50,000 MW Hydro Electric Initiative, launched by the Ministry of Power in August 2003, involving development of 162 projects, is the most powerful initiative taken during last 50 years. This has led to a very complete preparation for commissioning more than 16,000 MW capacity in the 11th Five Year Plan. Subsequently, 12th Five Year Plan will see, based on the preparations done for the 50,000 MW Initiative, even larger hydro electric capacities being developed.

  • The Govt. decision to treat all hydro electric projects of capacities of 25 MW and below as mini Hydel Schemes, which would be entitled to special dispensations and concessions, also vindicates the commitment of the Govt. for the speedy implementation of hydro schemes. When we talk of Water Energy, in effect we mean that the potential energy contained in water should be exploited and used before water is allowed, through the river networks, to get into sea. This would be possible provided we create water reservoirs by appropriately designing and constructing large dams. Unfortunately, our approach, strategy and action in the past have not been able to make any significant dent on exploitation of hydro energy through large dams and reservoirs.

The following Table highlights the per-capita storage in terms of cubic meter in some of the select countries :


Per Capita Storage









South Africa




From the above Table, it may be seen that India has practically not been able to develop large storage schemes and therefore it is very clear that most of our water, through various river systems coming out of various mountain ranges as also from the rains throughout the country, go into the sea without the country being able to harness the enormous energy contained in these water systems. There are in fact, very few examples of schemes like Bhakra-Nangal, Sardar Sarovar and Tehri Dams.

How is it that we would be in a position to enhance the hydro based generation capacity, reverse the declining trend of hydro electric proportion, increase per capita storage - and all these at much faster speed than we have been doing so far - is really the challenge the energy planners and developers of this country face. But, before chalking out a strategy and evolving an action plan it would be necessary that we identify the issues involved. Some of the important issues which have been responsible for delayed identification and implementation of these schemes are outlined below :

  1. Inter state water disputes have been the cause for some of the projects not being taken up for years together. As mentioned earlier, water being a state subject, the role of Central Government has, to a great extent, been constrained in resolving these issues.

  2. In some cases of river systems, particularly in Jammu & Kashmir, the process has been affected due to international implications. Differing interpretations by India and Pakistan, of the Indus Water Treaty have also led to these delays.

  3. Most of the hydro potentials are concentrated in North Eastern States, Uttrakhand, Himachal Pradesh and Jammu & Kashmir as highlighted in the Table given earlier, Remoteness of the project sites, with practically no road connectivity and absence of other infrastructure, has been the most responsible factors for a tardy growth of hydro electric capacities in the country.

  4. Almost all the hydro projects have huge forest coverage. Execution of these projects would mean destruction of these forests, particularly if we have to go in for Storage Schemes. As mentioned earlier, it is the storage schemes which enable better exploitation of hydro potential. Besides, getting clearance, compensatory afforestation, availability of land for the same are major issues.

  5. While in a large number of cases the areas are not densely populated, and therefore in these cases reservoirs may not lead to evacuation of large populations, but there are a number of schemes in which if we have to develop the projects to optimal energy generation, large submergence would be inevitable and in these cases massive movement of families from villages and towns may be unavoidable. Rehabilitation and resettlement therefore becomes a major area of concern and of challenge in developing these projects. As a matter of fact, in spite of the fact that there are strong and weighty reasons in favor of large dam projects to store water, regulate its flow and produce power as and when needed, and in the process allow waste of minimum amount of water being thrown into the sea without using it for useful purposes, yet rehabilitation of large population does create strong pockets of resistance to such dams.

  6. This has also been one of the reasons that for many years energy professionals and policy planners did not accord recognition to storage projects as being renewable. Only in the last few years, there has been a growing realization and recognition for treating even storage based hydro electric projects to be in the category of Renewable Energy source. It is therefore essential that we formulate a comprehensive approach and widely acceptable rehabilitation and resettlement policy with a human touch - a policy which could motivate administration as well as people at large to facilitate development of such projects in the national interest. Apart from the policy providing for a reasonable compensation, suitable resettlement in well developed townships with good facilities, required infrastructure including good road connectivity in displaced areas, what would also be needed is a suitably formulated communication strategy to convince people that their sacrifice is for the national cause, their inconvenience could be more than offset by suitably providing for necessary facilities and that the whole scheme could be converted into a win-win situation. Unless the people being displaced carry conviction that the project is not only in the national interest but it is also in their own interest, it might be difficult to embark upon large storage projects. The skill of policy planners, of administration and of project developers lies in how best they are able to succeed in the above approach.

  7. In the last few years, state governments have become highly assertive in the matter of allocation of projects. Expectations are rising. Provision of 12% free power, which has been in practice for several years and is in accordance with the Govt. of India policy, is being considered inadequate by a number of hill states. Their desire is to have larger quantum of free power. In many cases these states want that the developer companies should also pay a premium (large sums of money) to the States, besides free power. In some cases the states have also been wanting equity position in these companies without having to pay the equity contribution. In the process what seems to have been missed is that all these extras and adds on are going to increase the cost of power. While the objective is to produce power at lowest possible cost, these expectations are proving counter to this main objective. These issues have remained unresolved for a few years now. This requires urgent intervention of the Govt of India at the highest level so that project developments proceed unhindered.

  8. Another major issue which is proving to be a big hurdle, and is definitely impeding the process, is the clearance by the forest authorities under the Ministry of Environment and Forests. Thus far, Forest clearance was being accorded on the basis of environment management plan which required compensatory afforestation, catchment area treatment and associated activities to maintain ecological balance in the area. Only in cases where the forest also involved wild lives, a more rigorous and lengthy procedure was required to be followed. Not only a recommendation from the National Wildlife Board was a necessity but it also required that each case should be reported to the Supreme Court before the final sanction is given by the Ministry. In the last few months the problem has got further compounded in that not only wildlife cases but it appears that all cases of forest clearance are required to be reported to the Supreme Court before the project is cleared from the point of view of forest sanction. This has substantially slowed down the project activities. There are a number of cases where every preparation is in place but the construction cannot commence in absence of forest clearance.

  • This issue again requires urgent intervention at highest level so that a more streamlined procedure is put in place and project execution proceeds in a smooth way.

  1. There are a number of good hydro schemes which have potential not only for power generation but can provide for irrigation in a big way, drinking water and at the same time go a long way in flood moderation and control. As we are aware, large parts of a number of states get severely affected due to heavy floods. Crops get damaged and the floods also cause devastations to human lives. These Schemes could provide regulated water supply as also regulated power generation. But somehow, the cost sharing of the project capital cost has, so far, been done in a manner as per the existing approach that a disproportionately high burden is placed on the power project component thus rendering the whole power project unviable. As a result, invariably the schemes are not taken up for implementation. What is required is that the formula and approach for apportionment of cost into power, drinking water, irrigation and flood moderation and control is not only revisited but a balanced dispensation is evolved so as to lead to implementation of these projects under which each component is made commercially viable. Unsustainably high power tariff would lead to non-acceptance of the project and the whole exercise would turn out to be a non starter.

  2. For the first time, Private Sector has got interested, in a significant way, in developing hydro projects. In view of difficulties and long gestation, they were lukewarm in the past. In the Eleventh Plan (16,553 MW), the share proportion is Central - 9685 MW, State - 3,605 MW and Private - 3,263 MW. It has been seen that non-availability of well prepared reliable detailed project reports stands in the way of inviting project developers to participate in a competitive bidding exercise with the sole criterion being the lowest tariff. As a result other methods for allocation of projects have been adopted by various state governments. In the near time frame it appears virtually impossible that comprehensive Detailed Project Reports (DPR), which requires studies and investigations for almost two years, are prepared for a large number of projects which can then be offered to private sector for development on the basis of competitive bidding for tariff. Therefore a flexible approach will need to be adopted for allotment of projects on the basis of predetermined objective criteria. The process, however, to be adopted by the state governments will need to be transparent. This has already started happening in certain cases.

  3. The expectation of the state governments for larger quantum of free power beyond 12%, which is admissible as per the present policy, will also need to be considered with a positive orientation. A higher quantum of free power after the loan repayment by the project developers could definitely be a workable proposition. While the issue of larger amount of revenue through higher amount of free power to the states could be considered, as mentioned above, with a positive view, a point which needs to be made to the state governments very strongly is regarding the utilization of funds so generated for local area development. Since this has not happened, trust of people and their involvement in project development as also their cooperation for a speedy implementation has been lacking. To a great extent, the affected people are right and the system of administration wrong. Unless this gap is bridged, we may hardly expect an unstinted support and cooperation from the people of the area. Stakes are high 80% of the potential lies in North East. These states are under developed. Expectations of people as also of these governments, to a great extent, are genuine. Therefore, our policy and our approach definitely need to capture the sensitivities of the hill estates and more particularly of the North Eastern Region.

  4. Our track record on utilization of fund generated from the deposits made by the project development companies for compensatory afforestation are as bad as our approach toward utilizing the fund generated out of 12% free power, for local area development. It appears that not even 25% of fund for compensatory afforestation has been utilized properly for the purpose for which it was meant. Obviously therefore, the confidence of the people in the system, in the policy and more particularly in implementation of commitments is shaken. This leads to an atmosphere of mistrust among affected people and the NGO's, leading, in turn, to lack of enthusiasm and cooperation for such projects. Project Development Agencies and the Government together will need to work out a modality through which large forests are developed to compensate for what is destroyed. This has not happened so far. This must happen with full commitment and earnestness.

Copyright : R.V. SHAHI