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Friday, December 21, 2012

The Maheshwar project is a telling account of why privatisation in power projects has not worked. Raju Kumar reports

Why is it that economic reforms have not worked in the power sector as they have in the others? The sordid answers to this complex question are best reflected in India's first private power project, pegged to generate 400 MW of power, which two decades down the line has been unable to produce even a flicker.

The Maheshwar dam project on the Narmada river was billed as the life-saver for Madhya Pradesh which, at its peak was expected to generate 400 MW of power. As part of the many electricity projects in 1978, the Maheshwar Power Project was proposed under the aegis of the Narmada Valley Development Authority (NVDA). The state government changed plans in 1989 and planned to construct it under the Madhya Pradesh Electricity Board but after economic reforms the project was handed over to private players.

Since then, this ambitious scheme expected to be a trailblazer for private investment in the country's power sector, has been mired in a dreadful saga of mismanagement, financial irregularities, rehabilitation and assessment issues.

The latest spanner in the wheels of activating this project is a decision by the National Green Tribunal (NGT) to grudgingly allow a total of 154 meters of water storage capacity in the dam's reservoir.

In the normal course of things, it would be considered good news, but environment activists would have us believe that at this height, hundreds of people would meet a watery end. The company in charge of building the project and the district administration, on the other hand, say that 154 metres is fine and that fears are unfounded and unsubstantiated.

The confusion has been compounded because the technical expert Central Electricity Authority (CEA) has been quoted as saying that at this height, it would be impossible to generate even 40 MW of power! If that was not enough chaos and confusion, it is believed that if the height is raised to 154 metres, rehabilitation issues for those who are affected would take on drastically different proportions, compensation for which will necessarily have to come from the company.

The project had been handed over to the rromoters of the company S Kumars in 1992 and it became the first private investment in India's power sector, weaving dreams of a superbly-lit India.

S Kumars in turn set up a new company, Maheshwar Hydel Power Corporation Ltd to execute the project. Privatisation in the power sector was based on the premise that private players would force a pace of execution which was unknown in government companies.

However, that never happened. Foreign investors who had shown initial interest in the project backed off realising that it did not look a promising enough investment.

Says Khargone District Collector Navneet Kothari, "The NGT has allowed that under the guidance of experts, 154 metres of water can be stored in the dam. A three-member committee will decide on the modalities of filling in the water after which we will begin work.'' Till date, no notification has been issued for setting up this expert committee.

Alok Agrawal of the Narmada Bachao Andolan says the company and the district administration have furnished bogus surveys to the NGT in an effort to deliberately lessen the impact of rehabilitation. "On August 7, when the Maheswar Dam had about 154 metres of water, about 400 families in nearby villages were affected, submerging a lot of cultivable fields. A similar situation had arisen in August 2011 as well. No compensation or land has been paid to farmers affected by the project. It also goes against the Supreme Court order which has made it clear that before the farmers can be removed from their lands, a comprehensive rehabilitation plan has to be in place.''

But key questions remain unanswered. Will 154 metres suffice or should the storage capacity be pushed further up to 162.5 metres, as in the original proposal, so as to guarantee the total power generation?

Says Antar Singh Patel, resident of Sulgav village, "We four brothers have 18 acres of land submerged under water. The company is not willing to compensate us by providing an alternative land site.'' Points out Umrao Singh of the neighbouring Jalud village, "Some of the villagers got compensation in the beginning but now they are being told that they are not original residents of the village.'' There are numerous such tales of neglect that abound in the area.

Activists are not amused. Says Alok Agrawal, "The government believes that only 22 villages will get submerged. Our information is they number 61. What option do the people have except to approach the courts? The other issue is a question of ethics. Why should the government be hell bent on promoting a private company overlooking all irregularities? Why should the state government offer counter guarantees, as it has done in this case? According to information culled from a RTI reply, the company proposes to sell electricity at Rs 10 per unit, assuming it begins generating electricity. Who will bear the cost of this costly power.''

Maheshwar Hydel Power Corporation Ltd's Corporate Communications chief Gulab Gupta is quite cool. "After the NGT's directives of filling in water, the company will keep its three turbines running. All civil works have been completed. The height of the water will determine entitlement for compensation for those are hit.''

But even the company is in no position to say when power generation would begin. With such splendid uncertainties dogging its way, it is not difficult to see why private investment in the power sector in the country is not likely to take off for a long time to come.


IIPM Mumbai Campus

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