DAMMING THE TEESTA..............

DAMMING THE TEESTA ............ PART 1

Latha Jishnu
New Delhi January 07, 2008

A gold rush is on in Sikkim for hydroelectric projects. Entrepreneurs from across the country have rushed to the Himalayan state to set up hydel projects, some with no experience in the sector, as the government goes all out to become a major power exporter.

The magnet for these projects is the Teesta, a turbulent river that drops from an elevation of 5, 280 metres to about 230 metres over a distance of 175 km, making it ideal for a cascade of hydro power projects.

So far, investment of around Rs 13,000 crore has been committed to the larger projects — and proposals are still pouring in despite the Sikkim government's insistence on 12 per cent free power from each project.

The state is also seeking a 26 per cent share in the equity although promoters say no money is being paid upfront by the Sikkim Power Development Corporation, the nodal agency. Instead, the state's contribution is being adjusted against the share of its free power.

Sources in Gangtok say hydro power is the biggest business going in the state whose mainstay is agriculture despite the severe limitations on cultivable land.

There are reports that handsome commissions are changing hands as promoters vie for projects. Companies, however, maintain it is the efficient environment that is drawing them.

"We took up the project because the Sikkim government is proactive and quick in decision-making," says Y N Apparao, managing director of Teesta Urja Ltd, which is setting up the largest of the projects, the 1,200-Mw Teesta III.

"Land acquisition, along with environmental and forest clearances, took less than two years." That could well be a record because such clearances usually take three or four years.

With the ministry of power's special thrust on hydro power, Sikkim has been aggressively promoting its potential over the past four years.

Twenty-nine projects, from the large to the tiny (32 Mw), will harness the power of the Teesta and its tributaries to throw up generating capacity close to 5,600 Mw.

The major projects, however, are the six cascading projects, Teesta I to VI, which will provide the bulk of the capacity (3,505 Mw). This was the original potential estimated by the Central Electricity Authority but since then the state has added several projects to the list along with 11 more that have been proposed as part of the prime minister's 50, 000 Mw hydro power initiative.

For the Teesta basin this is an unbearable burden. Neither its fragile geology, prone to earthquakes and heavy landslides, nor its unique ecology can sustain projects of this magnitude.

Sikkim is known for its extraordinarily rich flora and is one of the global hotspots for endangered species of flowers and medicinal plants.

An exhaustive report on the carrying capacity of the Teesta says only three of the six cascading projects are environmentally feasible (IV, V and VI) while putting a question mark over Teesta III.

At best, the basin can support 2,000 Mw of hydro power capacity, according to the chairman of the committee that prepared the just-released report.

Ironically, the report was commissioned by the ministry of environment and forests (MoEF) which has violated its own stipulations on clearances.

The first project it approved was the 510 Mw Teesta V by the public sector National Hydroelectric Power Corporation (NHPC) in May 1999. At the time, MoEF had stipulated that "no other project in Sikkim will be considered for environmental clearance till the carrying capacity study is completed".

All the same, it has given clearance to seven others. DAMMING THE TEESTA PART 2 Professor M K Pandit, director of the Centre for Interdisciplinary Studies of Mountain & Hill Environment (CISMHE), has produced a bombshell. His assessment of the Teesta basin's carrying capacity will not please the Ministry of Environment and Forests (MoEF) which commissioned it or provide much comfort to the National Hydroelectric Power Corporation (NHPC) which paid for it. His brief was to evaluate the capacity of the Teesta river system with regard to the hydro power projects being proposed in the state and the findings are stark: the ecosystems above Chungthang and its environs have low carrying capacity for large-scale projects and should be left unperturbed. This means that the first three stages of the six cascading projects on the river (Teesta I to III) must be scrapped. However, since the last is under execution, there is nothing much that can be done, concedes Pandit. "The stakes are high in Sikkim and it is unlikely that the other two projects will be scrapped," says the CISMHE director who put together the 10-volume report jointly with Wapcos, IIT-Delhi, North Bengal University and Sikkim Government College. It cost Rs 5 crore, took nearly six years to complete and is a landmark report. "Initially, only five projects were envisaged; now there are 29 and I am horrified," says Pandit. The major concerns highlighted in the report are the cluster of epicentres in the region and the probability of earthquakes — the most recent was in February 2006 — combined with the geological weakness of the region. Apart from the frequent landslides, the thick moraine deposits in north Sikkim provide weak substrates to any large project, it warns. The other serious problem is the threat to the flora and fauna of the state, a huge chunk of which comes under the Khangchendzonga Biosphere Reserve. The report provides detailed threats presented by five of the hydroelectric projects — the analysis on Teesta V, which is being executed by NHPC, is missing — and the short point is: the projects are all in geologically and ecologically fragile regions that are also biologically very rich. While Teesta I and II are deemed not feasible, detailed geological investigations are absolutely essential for Teesta III. The only project that the report endorses is Teesta VI because significant changes in the land use have already taken place. Pandit has suggested the setting up of a Teesta Basin Development Authority as the final authority for monitoring the various hydro projects and suggesting appropriate changes in their design and implementation. It should have legal powers and its rulings would be binding on all parties. The report also says it would not be wise to ignore the opposition to some of the projects by the local people. The Lepchas, one of the original tribes of Sikkim, have been on relay hunger strike since June 20 last year to protest against the incursion of outsiders into Dzongu Valley which they consider sacred. They are planning a legal challenge to Teesta III. Neither the Sikkim government nor MoEF has responded to Business Standard's queries about the conclusions of the carrying capacity report. AGAINST THE RIDE The government and developers always emphasise that run-of-the-river hydel projects are benign. This is not usually the case. In the case of the larger Teesta projects, it involves construction of large dams which divert the river waters through long head race or underground tunnels (HRTs) before the water is dropped back into the river at a downstream location after passing through the powerhouse. Some of the tunnels are over 17 km long, which means that the river runs dry for long stretches since 80-90 per cent of the water is diverted into the tunnels. The tunnels add to the geological problems in the area, which is marked by lethal flash floods. The only plus point is that smaller areas are submerged compared to storage dams. http://www.businessstandard.com/common/storypage_c.php?leftnm=10&autono=310127 (The Business Standard, January 9, 2008) DAMMING THE TEESTA - PART 3 What is the real cost of power being produced in Sikkim? This is the question that power purchasing corporations and retail consumers would like to know about the Teesta projects. The costs of power will be higher for consumers given the kind of agreements that Sikkim is signing. Take, for instance, the agreement on Teesta III, the largest project under implementation. According to the deal signed with Teesta Urja Ltd, the consortium developing the project, the 1,200 Mw project will give 12 per cent free power to the government for the first 15 years. Thereafter, the government's share will go up to 15 per cent till the end of the BOOT (build, own, operate and transfer) contract which is for 35 years. Prayas, the Pune-based energy research organisation, says tariffs will increase quite sharply because of the free power deal. However, Teesta Urja managing director Y N Apparao says its tariff is still competitive. He told Business Standard that it has entered into a long-term agreement with the Power Trading Corporation (PTC), one of the consortium members, to provide power at a levelised tariff of Rs 2.25 a unit for 35 years. PTC will be supplying the power to the four northern states of Punjab, Haryana, Uttar Pradesh and Rajasthan. The costs of the project have a bearing on the tariffs and a quick analysis shows wide variations in the costs of the Teesta projects. The public sector National Hydroelectric Power Corporation (NHPC) which is expected to commission its 510-Mw Teesta V by May 2008 is unwilling to state what its tariff will be. But sources said it is expected to be in the region of Rs 2.15 a unit. According to the latest figures with the Central Electricity Authority, NHPC's costs for Teesta V have risen to Rs 2,527. This works out to a cost of just below Rs 5 crore per Mw. Teesta III, too, is in the same range, but the costs of the 500-Mw Teesta VI, promoted by the Hyderabad-based Lanco Group, are significantly higher at Rs 6.57 per Mw (CEA gives the project costs at Rs 3,283 crore). In fact, Lanco's proposal to sell power at a tentative Rs 2.32 to Maharashtra ran into rough weather at the regulatory committee hearings because there was no clarity on either the capital costs or tariff rates. An underlying problem, according to power analysts, is the lack of reliable hydrological data which is resulting in uneconomical hydropower projects in the Northeast and the Himalayan regions. This means that hydropower plants are not designed for optimum capacity. This also results in calculations on supply going awry. The CEA's preliminary observations on Teesta VI find that the project would operate at full capacity only during the three monsoon months, prompting experts to say that Lanco project should not be qualified as a peaking power plant. Besides, power generation from Teesta VI would be totally dependent on outflows of NHPC's Teesta V. The lack of robust hydrological data encourages state governments and promoters to put out optimistic (or unrealistic) assumptions about generation. The risk, says Girish Sant of Prayas, is amplified because there is no economic incentive in the current hydro power policy for 'optimum' design for dams and hydropower projects. Neeraj Vagholikar Kalpavriksh Apartment No. 5, Shree Dutta Krupa, 908 Deccan Gymkhana, Pune - 411004 India Ph: 91-20-25654239/25675450 email: nvagho@gmail.com nvagho@vsnl.net