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Home > Business > Business Headline > Report

The Sikkim hydel power gold rush

Latha Jishnu in New Delhi | January 07, 2008 16:39 IST

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  (Rs 130  billion) 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.


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