Ziraat Times Exclusive Report
Srinagar, June 19: Jammu & Kashmir government is planning a “Global Investors Meet” in Srinagar in July, with the stated aim to attract greater private investment in the sector. A meet of this kind is being seen as an unprecedented move in Jammu & Kashmir. However, at the same time, there are also a host of questions that are being raised.
Is this new investment being sought under the State sector or the central sector? If the investment is meant to bolster the State sector power portfolio, would counter guarantees from the Centre come by easy? Who would negotiate any conditions imposed by any potential foreign investors in this process? What would be J&K government’s role in that?
If the new power houses with international investment come up in state sector in J&K, would the economics of this development help bolster state’s income in the medium and the long term?
Most importantly, have the policy planners done a robust analysis, including a comprehensive Strengths-WeaknessesOpportunities-Threats (SWOT) analysis on the way hydropower sector is evolving?
At a time when the entire hydropower sector viability is under question due to higher production costs compared to other renewable and non-renewable energy sources, is such a meda investor meet really a good idea? Why not a global investors’ meet on solar power generation in J&K?
When Ziraat Times spoke to energy experts on this development, we learnt that the focus has ideally now to be on the development of much cheaper solar power development in the state. Hydropower development is expensive both financially and in terms of the environmental costs as well.
Our three main river basins – the Chenab, the Jhelum and the Indus basins – have experienced severe environmental degradation.
Minister for power Sunil Sharma recently said that the investors from hydropower sector for this meet were coming from across the world, not from India only. He further said that some of the “world’s top most hydro-power generation companies” were expected to take part in the meet.
Jammu and Kashmir has exploited only about 16 per cent (totalling 3,263.46 MW) of the estimated 20,000 MW of hydro-power potential so far, according to the State Economic Survey, 2017. Some studies suggest that about 16,475 MW potential has been identified so far. Out of the 16,475 MW identified potential, 11,283 MW are in Chenab basin, 3,084 MW in the Jhelum basin, 500 MW in the Ravi Basin and 1,608 MW in the Indus basin. Out of J&K’s total installed capacity, 1,211.96 MW are in the state sector, 2,009 MW in the central sector and 42.5 MW in the private sector.
“The rivers of J&K are biggest resource for our economic growth, employment generation and new era of development. We have not been able to tap our rivers. We have kept J&K hostage to certain laws. World has changed since then but J&K has lagged behind,” Sharma told news agency PTI recently.
He has also raised questions on J&K’s existing power policy, which, he said, “instead of attracting investments, has discouraged investors.”
In this backdrop, Ziraat Times sought the views of energy experts, business leaders and analysts to understand the significance of this development. Here is what they have to say:
Shah Faesal (MD, JKPDC) tells Ziraat Times
“Power Department is planning to organise a global investors meet in the last week of August. It will be a major event where investors from across the world will converge at Srinagar to explore investment opportunities in power sector. Three major hydropower projects are awaiting investment decision. 1856 Sawalkote. 924 MW Kirthai 2 and 850 MW Rattle. Besides many small hydropower projects. And transmission and distribution projects. Idea is to explore easier financing options, look at advanced technologies and bring in developers with adequate technical capacity.”
Prof. Siddiq Wahid (Academic and former vice-chancellor, IUST, Kashmir)
As far as whether it should come up under the “state sector”, my response would be a very loud yes.
For one thing, we assume that the immediacy of having the state private and public sectors accountable would make it relatively more transparent.
Second, it would help us towards economic self-sufficiency.
And third, presumably, it would give in-state talent the right of first refusal on the jobs it may create. It would be in the long term interests of the state provided the transactions are transparent, locally beneficially and builds our economy from within. This can only happen if the standards of such “international investment” are pegged at international levels and not local levels to benefit both the cost of investment to the investor and better levels of transparency within the state.
Iftikhar Drabu (Energy expert and analyst)
There are many questions that come to one’s mind on this.
Fundamentally speaking, has any ground work been done for this – if yes what is it? Why the exact dates for this meet are still not known? Investors have their diaries booked for months in advance. I think the state can provide incentives for investment – they have already done so as I have written in an article regarding Pakal Dul.
I am not sure counter guarantees are needed for this kind of investment but yes transfer of land is going to be a stumbling block because of the state’s laws.
If these projects get through it would boost the economy but will they get through – I am not fully convinced! Do the people leading this understand the challenges of hydro development – again not sure!
Javed Tenga (President KCCI)
It augurs well if the same has been planned well although we have no knowledge of the way they have gone about it. We need such a meet for some sectors of our economy where the expertise of foreign investors will be invaluable.
Do you think such new initiatives will come up under the State sector?
State as such does not have the resources to do such projects but there are investors who have resources which can invest in such projects particularly which have a long gestation period and they could tie up with the state to guarantee the smooth setting up and running of these projects .
Would counter guarantees from the central govt come by easy considering the past experiences? How could J&K state position itself on the issue to safeguard its political and economic interests?
Nowadays counter guarantees are not asked for but in case of J&K it may be insisted by foreign investors keeping the fragile political situation in J&K. We feel that this time around the central govt will be forthcoming as the present central govt wants to use the water resources of our state as a weapon against Pakistan and they have been explicit in their announcements and could be a reason for their readiness to give counter guarantees this time around.
If new power houses with international investment come up in state sector in J&K, would it help bolster state income in the long term?
Depending on how they are able to negotiate. As the generation cost presently is costlier by the hydropower route it will be upto the state to negotiate the best possible deal for the state . However, if we get the power houses which will ensure our energy security it will be best for our industry including tourism . Our lot of economic activity is held up because of this and our productivity particularly during winter is effected profoundly with practically no production in factories who cannot be centrally heated for want of electricity etc.
Will such investment in the long term interests of the state?
In the long term yes it will help the state to get energy security and if the finances are got at very low rates there is a possibility of cost of generation low because of capital costs as hydropower is the lowest form in respect to cost for operation of capital costs are kept in control.
Ashfaq Siddiq Dug (Tourism business leader)
I don’t foresee that these kind of initiatives will come independently under State sector without any pre conditional intervention from the centre.
With regard to the counter guarantees by Center, they are never easy to come as in past and more recently the NHPC outrightly declining to produce counter guarantee when the chorus of transferring the power projects back to State was being demanded from the Center.
As far as state positioning itself on the issue of safeguarding its political and economic interests is concerned in present circumstances, New Delhi won’t let that happen as our state forging on the path of economic empowerment will serve them otherwise.
As far as the potential of generation of hydro power in our state is considered its immense and if fully exploited not only can it supply power needs of India , our State and still it will be left with surplus power to export . Investments of these kind will surely bolster the economics of state and will put it on the path of development but ! Million dollar question remains ? Will center wish that?
Dr Sanjay Parva (Social Activist and Writer)
Power scenario in the state is grim and has continued being so since last many decades.
Under this backdrop, global investors meeting on hydropower in J&K must be seen as a positive development, especially at a time when power minister Sunil Sharma announced last week that centre has released Rs 8,000 crore to boost power sector in the state.
Centre’s keen interest in augmentation of power sector of the state along with this global investors meeting can be expected to pave way for many new developments for the state.
In a state, most of which is torn by trouble, and developments have gone down miserably, this initiative and more initiatives as this in other sectors that have been left in lurch, can instill a lot of hope, from the economic point of view and otherwise, among people of the state, which is resource-rich, but each resource miserably ether under-utilized or utilized improperly.
Global meetings bring along with them global expertise too. You have a lot to learn, and gain. Counter guarantees from centre must not be a problem. India has had $31 billion foreign investment in different sectors in 2016-2017, so it should have no reason not to have any in our state. In any counter guarantee it is a win-win situation for all stakeholders; rigidity by any one leads to naught.
I think little bit of flexibility on our part is the key. Then we have to look at the pros than cons of the investments that come our way; these investments are not only going to bolster state economy but also provide jobs to thousands of our skilled and unskilled people. It is sad that we continue to languish in conflict.
Hadn’t we been, investments – not only foreign but domestic too – could have changed the very face of our wonderful state. We could have automotive plants; we could have manufacturing units, pharmaceutical production, and even parts of service sector operating from our soil. We have shutdown!
Dr Raja Muzaffar Bhat (Activist, Columnist)
I believe this is a good initiative which can challenge the monopoly of the NHPC in this sector as J&K state has a very bad experience working with NHPC from several decades. At the same time people of J&K need clarity on the following issues.
While we plan to tap 20 , 000 MW Hydro-Power potential in J&K state have we ever thought what kind of environmental impact it will have on J&K ‘s forests, mountains, glaciers, villages and general eco system? PDP MLC from Kishtwar Firdous Tak has already in a statement said that Hydropower projects have destroyed Chenab valley….
Don’t we think while we start work on construction of more Power Projects we will be destroying more and more Mountains and Green Forest areas?
In Kargil and Leh areas where there is less Forest cover around Suru, Zanskar and Indus river Hydropower projects can be established
In places like Chenab valley , Kashmir valley we must go for Small HE projects of 5 to 10 MW so as to reduce environmental disasters
New Power projects in J&K with International investment can only bolster state income provided they provided the mode of agreement is altogether different. I again voice for small Hydropower Projects not big ones that are going to destroy our ecosystem. To witness this disaster one must visit Gurez and Chenab valley.
Iqbal Hakim (Energy Specialist)
It has come as a surprise that such a big event has not been p u b l i c i z e d well in advance. I was amazed to hear that the dates have not yet been finalized and that tells us that invitations must not have been sent since the dates have not been finalized.
Such summits are usually planned at least a year before and massive canvassing is done. Look at the investor summits in Gujarat, MP or any other state. You see newspapers flooded with advertisements of the summits before many months.
Also, massive canvassing is done by personal meetings, advertisement in reputed journals and through other conferences. All these are missing and that makes the exercise look farcical.
You may well get many investors who will sign MoU’s promising to invest millions but these figures hardly translate to actual investments. The Gujarat investment summit figures will tell us how much of these materialize.
The state government needs to be very smart if it wants industry to pick up. The policies need to be clear and single window clearences must be ensured along with time bound approvals. Moreover, the water usage charges make the end product costly and that will make many new plants unviable. Moreover, the free power of 12% will again hamper private investments.
One thing must be clear in our mind that any investor will want to make profit. He will come to your state only when he sees greater opportunities for profit and a clear policy environment besides ease of doing business.
You need to create a win win situation. Then only can we expect some investment. Till now J&K has not come up with anything that will cheer up an investor and hence I doubt that this summit will be a success assuming that it is attended in large numbers. The entire hydro sector is under great stress at the moment.
NHPC is investing heavily in solar and so are other companies because many see that as a future. GoI has not yet come up with time of the day pricing and the peaking plants are not provided additional incentives. This has jeopardised the hydro sector and unless clear cut policies don’t come up regarding hydro, I doubt that the sector will pick up.
The solar and wind costs are much much lower.