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on arunachal’s egregious hydel plans

between december and now, i worked on a set of stories about the hydel projects coming up in arunachal pradesh. between 2006-09, this state in north-eastern india signed 130 MoUs with about 55 companies allocating them places where they could build dams. several things about these MoUs were surprising. these MoUs translated into 130 dams on 8 river basins — probably the world’s highest concentration of hydel projects.

it was not clear why the state needed to sign so many MoUs in such a short span of time. it was not clear why it had signed projects for more MW-age than what the centre had budgeted for. for its part, while the state government said this rush just showed its urgent desire for development, many of the companies it had tied up with had little or no background in hydel power generation. there were other puzzles. for some reason, the state had turned its back on multi-purpose projects (which can also do flood control) and was only pushing hydel power projects.

stories seeking to uncover the hydel mess in arunachal pradesh began popping out from today. the first one, a lead story which introduces the significance of what has happened in arunachal, compares this to coalgate.

Hydel in Arunachal has four parallels with the controversial coal block allocations of 2006-09. One, Arunachal gave out more hydel projects than it needed to. Two, the state used discretionary powers to allot dam sites, increasing the clout of state politicians, bureaucrats and local brokers to influence allocations. Three, besides sector heavyweights such as Reliance Power, Jindal Power and NHPC, the list of 55 companies featured those in unrelated businesses such as seeds, travel, highways and real estate. Four, construction has barely begun. The state doesn’t have roads or transmission lines. Companies don’t have money and even genuine players are looking to exit.

the main story explores why few of the projects have gotten off the ground. and ends up concluding that something similar to the ill-fated thermal power plant boom i wrote about earlier took place in arunachal. companies rushed in fecklessly. the state signed more projects than it could have supported.

As excited companies began taking a closer look at their new projects, they realised the supporting infrastructure— the primary responsibility of the state and the Centre—to add 40,000 MW in one go was not there. Road connectivity from highways to project sites was either missing or inadequate to support heavy vehicles. Also missing was power, transmission towers and administrative infrastructure like surveying staff and land records…

…Capital is missing too. All these projects are public-private partnerships (PPPs), with Arunachal bringing in equity of 11-26%—or Rs13,000 crore, according to Paliwal. In 2012-13, Arunachal’s entire budget was Rs3,535 crore. “We don’t know how the government plans to raise this money or if they have made any budgetary provisions,” says Kawale.

the motivations of the companies are easily understood. the main story elaborates on those. but what about the state government? why did it sign so many MoUs? 130 MoUs on 8 river basins? the answers, as ever, lies in political funding.

In April 2007, Gegong Apang was ousted and replaced by the then power minister, Dorjee Khandu. The MoU signing accelerated: 101 between February 2006 and March 2009. Brokers and fixers made money by connecting companies with state officials and politicians, who acquired new muscle overnight. Alleges Tapir Gao, state convenor of the BJP: “Unofficial payments made to the Congress ranged between Rs10-15 lakh per MW.” During that signing spree, Arunachal added 39,000 MW. Current and aspiring MPs and MLAs began lobbying for hydel projects to be allowed in their constituencies. Agrees Jarjum Ete, a Congresswoman and a Panchayati Raj activist: “All legislators have benefited from MoU signings in their localities.” At the same time, power has become a prized portfolio. Each of the three CMs after Apang retained the power portfolio.

that is how it is. more stories in the days to come.

coal to liquid projects. #coalgate

In the report it submitted last week, the parliamentary standing committee on coal observed that the inter-ministerial group (IMG) whose recommendations formed the basis of allotment of two large coal blocks to private players for conversion to oil “has not performed its duty honestly”. While the report does not elaborate on the IMG’s alleged failings, minutes of the IMG meetings, accessed by ET using the Right to Information (RTI) Act, shed light on them and reveal that some group members might agree with the committee’s indictment.

a story by TOI’s supriya sharma and me on one of the more ignored aspects of coalgate — the coal to liquid projects.

enter, contingent liability

The government’s plan to make the Aadhaar number the centrepiece of the cash-transfer system is now facing opposition from a new quarter: banks. Several banks, led by State Bank of India, have expressed reservation against jettisoning their current systems in favour of the platform created by the Unique Identification Authority of India (UIDAI), which issues the Aadhaar number and wants to make it the basis to authenticate an individual’s identity before every transaction in bank accounts into which welfare benefits are deposited. These new lines of conflict are throwing posers to, and could even delay, what is being seen as UPA’s gambit for the next general elections, due in 2014: universalise cash transfers. The banks’ reservation to the UIDAI authentication platform, built along with the National Payments Corporation of India (NPCI), a payment gateway, centres around two points…

A joint story by my young colleague at ET, Ahona Ghosh, and creaky old m rajshekhar.

a seemingly innocuous transaction

A company owned by former and current directors of the Naveen Jindal Group, and then by Naveen Jindal himself, gave an unsecured loan of Rs 2.25 crore in 2008 to a nondescript trading company, which used it to buy new shares on extremely generous terms of a company owned by Dasari Narayana Rao, one of the two ministers of state for coal during the controversial allotments of coal blocks to companies for captive use.

The complete story, here.

For context on this post, see this and this. the first is an aggregation of all the et stories on coalgate. the second talks about the role of political corruption in india’s coal industry.