Panel Wants Unforseen Risks In Factored Into Hydel Power Tariff

The Sambhamurthy committee, set up by the power ministry to suggest methods to attract private investment in the hydel power sector, has suggested that unforeseen risks involved in developing hydel projects should be passed on to the power tariff.

The committee has recommended that power tariffs should be based on the value of power (peaking or non-peaking) and the return on equity should not be pegged as in the case of thermal stations.

The committee has also recommended that hydel power plants providing peak power should be given additional incentives.

The committee says that there should be more flexibility while fixing the return on equity and it should be at least equal to that provided for thermal projects as these projects involve long gestation periods. The committee has recommended that the return on equity should be project specific depending on the gestation period of the project.

Hydro projects selected through the memorandum of understanding (MoU) route should be evaluated initially on a completed cost basis which takes into consideration the anticipated problems with the project. The difference between the completed cost and the actual cost, arising out of unforseen problems, would be passed on to tariffs after the increased cost has been ratified by the government.

For projects selected through the competitive bidding route, the tariff quoted should provide for all the cushions which include anticipated and unexpected developments during the construction of the project. Such projects should not be allowed to change the tariff.

The unforseen costs could be due to geological, technical and hydrological factors which do not arise when the project is conceived. For instance, the Dulhasti project is stalled as the French company withdrew from the construction of the project over the additional expenditure involved in changing the tunnel direction.

The committee has also identified the potential along the Himalayan belt and the north-eastern region that can be tapped. The Himalayan region has a vast hydro-power potential with only 28 per cent of the potential having been tapped. Some of the states that have been recommended include Arunachal Pradesh and Himachal Pradesh.