As the Centre rolls out a new push for small hydel power projects, the example of Karnataka is telling. The state that ranks top in the sector, with an installed capacity of 1284 MW, has seen a huge number of allotted projects fall through before the commissioning stage.
As per data released for small hydel projects (plants with a generation capacity of up to 25 MW) by the Karnataka Renewable Energy Development Limited (KREDL) till May 31, of the 519 projects allotted in the state, 386 have been cancelled.
In March this year, the Centre cleared a Rs 2,584-crore impetus for private participation in the small hydro sector, to facilitate installation of approximately 1500 MW of small hydro power, amid the West Asia crisis-triggered fuel shortage.
Most of the cancelled Karnataka projects were allotted in the 2007-10 and 2014-15 period, when incentives were on offer. Some among them were already on paper and granted renewals in this period.
Only 108 of the projects planned were commissioned, resulting in 943 MW, against the allotted total of 3198 MW.
The total installed capacity in Karnataka, across 133 projects, is 1284 MW, according to the KREDL data.
The most number of allotments were in 2022-2023, under a BJP government in Karnataka. Of the 225 projects allotted, 220 were cancelled, with only five projects, with an installed capacity of 42 MW, actually commissioned, the data shows.
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Allotments for companies which have not started their projects for long periods have all been cancelled, KREDL Managing Director K P Rudrappaiah said, adding: “Many of these projects were in the Western Ghats and did not get environmental clearances. The main reason for a large number of cancellations of allotted small hydro projects is this.”
Small hydel projects are usually located in forest areas and regions with flowing streams like the Western Ghats, and forest clearances are often a hurdle, KREDL officials said. However, they added, such plants get preference in these areas over large hydro projects for “forest, environmental, National Board of Wildlife clearances, and related Cumulative Impact Assessment”.
A KREDL official said: “The firms failed to start their projects despite multiple extensions.”
Projects cornered by a small group
The private firms assigned projects in Karnataka amounting to the highest generating capacity, and which failed to see them to the commissioning stage, have links to a BJP worker-cum-Bengaluru businessman, Vignesh Shishir.
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An accused in multiple cases of fraud, Shishir has also been in the news for filing cases in Uttar Pradesh to seek investigation into Congress leader Rahul Gandhi’s alleged “dual citizenship”.
KREDL data shows that 11 projects, with a capacity of 84 MW, were allotted to nine firms – Parpikala Power, Pushpagiri Power, Dakshina Kannada Power, GCI Power, Kodagu Power, Asia Pacific Industries, Kaltronics Automation, Davanagere Power and Monte Carlo Power – where Shishir or his family members are directors. All these projects were cancelled between 2014 and 2018 as the firms failed to obtain clearances, according to the KREDL data.
“Their allotments were cancelled after they remained only on paper,” a senior KREDL official associated with small hydel projects said.
Parpikala Power, Davangere Power, Monte Carlo Power, GCI Power, Pushpagiri Power, Kaltronics Automation and Asia Pacific Industries incidentally are also facing investigation by the Karnataka Police for allegedly being conduits for laundering of funds by the businessman’s family.
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Another major defaulting firm on allotted projects is Bhoruka Power Corporation, which got 11 projects, as per the KREDL data.
An earlier analysis by The Indian Express, in 2016, had shown that of 298 small hydro projects allotted by the KREDL in the preceding five years, for production of 1718 MW of power, projects accounting for more than half the generating capacity (880 MW) went to 14 firms that operated under 64 different names and were led by directors with overlapping interests and political connections.
Developers then had access to Central government subsidies to the tune of Rs 5 crore per project along with Rs 10 lakh for the project preparation phase. They were also guaranteed power purchase at the rate of Rs 2.30 KW in Karnataka as well as a 30-year lease on project land, making small hydro projects a viable business option.
The new push
A policy paper published by the National Council of Applied Economic Research on March 30 noted how, of “India’s assessed small hydro power potential of 21,133 MW across 7,133 sites”, only a “fraction” had been tapped. “The problem is not the absence of resources. It is the inability to convert resources into viable projects,” the paper said.
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The total installed capacity from renewable energy in India – across solar, wind, bio energy, small and large hydro projects – is 2.82 lakh MW, with solar power alone accounting for 1.57 lakh MW.
Overall, the country had 5179 MW small hydro installed capacity as of May 31, according to the Union Ministry of New and Renewable Energy data. After Karnataka, there is Himachal Pradesh, with an installed small hydel power capacity of 1013 MW.
In March, while announcing its new push for small hydel projects, earmarking Rs 2,532 crore for it, the Centre said: “This is likely to bring in Rs 15,000 crore of investment in the small hydro sector.”
A KREDL official said that, this time, an added condition is that private firms have a power purchase agreement with respective state governments.