Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614

Volume 4, No.2, February 2015

Public Private Partnership in Hydro-Power Development of

India: Prospects and Challenges
Amir Ullah, Senior Research Fellow, Department of Political Science, Aligarh Muslim University, Aligarh, Uttar Pradesh,
India
Abstract
India has experienced a sharp increase in energy demand as a result of economic growth and rising per capita energy
consumption. The Government of India is focusing on Hydro-power as one of the sources of renewable energy due to con-
cern for climate change and fast depleting coal/oilfields. But, its development has not been commensurate due to shortage
of financial resources, lack of power infrastructure, and modern technologies. The successful completion of Public Private
Partnership (PPP) projects in roads, airports, and other sectors have given an opportunity to implement it also in hydro-
power sector to fill the gap of power shortage especially in remote and backward regions. The water rich states have made
PPP policies and guidelines to initiate projects to fill the gap of power shortage. This paper will take an analysis of the
status of hydro-power projects in India, PPP policies and hydropower projects initiated through it, and successful exam-
ples of world hydro-projects through PPP models that provides immense opportunities in India

Keywords: Public Private Partnerships, renewable energy, Hydro-Power, climate change.

Intorduction
Power is the prime mover of economic development of a
nation and one of the major infrastructure requirements
for industrial, rural and agricultural development. It
helps in linking rural population with the fast changing
technological world. India has faced power shortage
since independence but now, it has become critical with
huge power cuts in a day. It needs massive additions in
capacity to meet the demand of its rapidly growing
economy. Considering the energy security concern and
commitment for a Low Carbon Growth Strategy, the
Government of India in the Twelfth Five Year Plan
(FYP) has made provisions to ensure sustainable devel-
opment of the power sector and is emphasizing the de-
velopment of hydro-power besides nuclear and other
renewable sources. It will help in solving the sustainabil-
ity problem associated with conventional fuels used for
power generation as hydro-power are non-exhaustible,
free and relatively clean. It is also the most efficient
means to convert energy into electricity. Power is ob-
tained by harnessing the kinetic energy of water running
through a turbine, and converting it to electricity by cou-
pling the turbine to an electric generator. Typically 85%-
95% of the energy in water is converted to electricity,
compared to 15%-20% for Photo Voltaic solar, 35%-
45% for wind, and 30%-45% for coal [1]. Hydro power
projects are zero pollutant, as compared to thermal pro-
jects which reportedly contribute to half of global carbon
emissions and India relies on thermal power to the extent
of 60% of its consumption today. Apart from being the
major source of clean energy, it can also be developed
for irrigation, fishery, flood control and other purposes.
The first Sindrapong Hydel Power Station in Darjeeling
(West Bengal), completed in 1897 is still in operation as
they have a very long life. The rivers meeting into the
sea without being used for irrigation or power is a waste
of the water in it. Power from all these rivers is the only
source of revenue for some state like Uttarakhand.
Hydro-power projects are classied on the basis of their
generation capacity as follow [2]:
a) Pico: 5 kW and below
b) Micro: 100 kW and below
c) Mini: 2,000 kW and below
d) Small: 25,000 kW and below
e) Medium: 100,000 kW and below
f) Large: above 100,000 kW
Moving water had been used for years to provide me-
chanical energy, but the first small-scale hydroelectric
scheme was developed in England in 1878 and the first
hydroelectric plant began operation on the Fox River in
Appleton, Wisconsin in 1882. Growing demand and
technological advancements, including the development
of the electric generator and improvements to the hy-
draulic turbine, encouraged the growth of hydro projects
[3]. Today, the share of hydro-power in the electricity
mix in countries with large resource endowments is as
high as 95% in Norway, 80% in Brazil and 68% in Ven-
ezuela. China is now the worlds largest producer of
hydroelectricity, including the largest hydro-power sta-
tion at Three Gorges Dam, with a generating capacity of
22.5 GW [4].
India is also one of the pioneering countries in establish-
ing hydroelectric power plants with the commissioning
of Darjeeling and Shimsha (Shivanasamudra) power
plants in 1898 and 1902 respectively and is among the
first in Asia to commission hydroelectric power plants.
Some of the public sector companies engaged in devel-
opment of hydroelectric power in India are National Hy-
droelectric Power Corporation (NHPC), Northeast Elec-
tric Power Company (NEEPCO), Satluj Jal Vidyut Ni-
gam (SJVNL), Tehri Hydro Development Corporation

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 Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614
Volume 4, No.2, February 2015

and NTPC-Hydro. Now, the country is going through a 6th Plan 3076.0 14460. 42584.7 33.96
phase of huge gap between demand and supply of power. (1980-85) 5 02 2
In order to overcome this shortage, the government has 7th Plan 3828.4 18307. 63636.3 28.77
opened the hydro-power sector for private sector partici- (1985-90) 1 63 4
pation since 1991. The successful completion of Public 2 Annual 881.50 19194. 69065.3 27.79
Private Partnership (PPP) projects in roads, airports, and Plans 62 9
other sectors have given an opportunity to implement it (1990-92)
also in hydro-power sector to fill the gap of power short- 8th Plan 2427.6 21644. 85019.3 25.46
age especially in remote and backward regions. (1992-97) 5 8 1
9th Plan 4538.2 26261. 103410. 25.40
2. Growth of Hydro-Power in FYP (1997-02) 5 23 04
The share of hydro-power in the total renewable energy 10th Plan 7886.0 34653. 132329. 26.19
production during the FYP periods has been shown in (2002-07) 0 77 21
table-1. Its share in the total installed capacity during 11th Plan 5544.0 38990. 199877. 19.51
First FYP was around 37 percent which gradually de- (2007-12) 0 40 03
creased to 19.51 percent during Eleventh FYP 12th Plan 633.00 39623. 227356. 17.42
(2012-17) 40 73
Table-1: Plan Wise Growth of Hydro-Power in India (as
on31.08.20
Hydro Installed Capacity at the 13)
Capac- end of Plan (MW) Source: Forty Third Report, Standing Committee on
ity Hydro Total Hydro Energy (2013-14), Lok Sabha Secretariat, New Delhi.
Plan Peri- Addi- In- In- Power Note: Does not include hydro projects having capacity
od tion stalled stalled share up to 25MW.
during Capac- Capaci- as %
the ity ty in- of The contribution of hydro-power in total installed capac-
Plan cluding total ity was more than 40 percent from Second plan to Fifth
(MW) other In- FYP periods. Thereafter, its share has gone down during
R.E.S. stalled successive plan periods to a minimum during the last
Capac- plan i.e. Eleventh FYP as shown in figure-1. The maxi-
ity mum contribution was during the Fourth plan and Annu-
1st Plan 380.19 1061.4 2886.14 36.78 al Plan (1966-69) when its contribution was at its peak of
(1951-56) 4 45.68 and 45.58 percent respectively. There were many
2nd Plan 977.18 1916.6 4653.05 41.19 reasons for the poor condition of hydro-power in the
(1956-61) 6 country from the Sixth FYP. Public protest against land
3rd Plan 2207.0 4123.7 9027.02 45.68 acquisition, rehabilitation and resettlement policies, lack
(1961-66) 8 4 of fund and technology, protest against construction of
3rd annual 1783.1 5906.9 12957.2 45.58 dams in addition to natural calamities were some of the
Plan (1966- 7 1 7 reasons. India displayed the fastest expansion rate for
69) investment of any large renewable market in the world in
4th 1058.3 6965.3 16663.5 41.80 2011, with a 62 percent increase to $12 billion. About
Plan(1969- 9 6 4.2 GW of renewable power capacity was added during
74) 2012, including about0.7 GW of hydro-power India add-
5th Plan 3867.7 10833. 26680.0 40.60 ed about 750 MW of hydro-power capacity, of which
(1974-79) 7 07 6 157 MW was categorized as small-scale (<25 MW) [5].
Annual 550.90 11383. 28447.8 40.01 The Twelfth FYP calls for a doubling of current renewa-
Plans 97 3 ble capacity to a total of 53 GW by 2017.
(1979-80)

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Source: Central Electricity Authority

3. Status of Hydro-Power in India

India is blessed with immense amount of hydroelectric The performances of central PSUs during Eleventh FYP
potential and ranks 5th in terms of exploitable hydro po- are not very encouraging in solving the power crisis in
tential on global scenario [6]. During Eleventh FYP, the India, especially in hydro sector, as shown in the table-3.
total installed capacity in hydro-power was 5,544 MW The achievement of targets made is very poor except
against the target of 15,627 MW. The state sector Tehri Hydro Development Corporation (THDC) which
achieved most of their targets in comparison to central achieved its set target of 1150 MW. The SJVNL,
target. However, during the Mid Term review, hydro NEPCO and NTPC (Hydro) did not achieve even a sin-
capacity targets were revised to 8,237 MW (2,922 MW gle percent against their expected target
in Central Sector, 2,854 MW in State Sector & 2,561
MW in Private Sector) [7]. The aggregate installed ca- Table-3: Hydro Capacity Addition by Central PSUs
pacity during this period was 5,544 MW (1,550 MW in during Eleventh FYP
central Sector, 2,702 MW in state Sector & 1,292 MW in S. Undertak- Tar- Achieve- Slip-
private sector). During Eleventh FYP, the actual No ings get ment pages
achievement was 54,964 MW against the target of . (MW (MW) (MW)
78,700 MW that includes hydro, thermal and nuclear )
sectors. The private sectors contribution was more than 1. NHPC (in- 5,322 1,150 4,172
the central and state shares. cluding
NHDC)
Table-2: Installed Capacity Addition during the 2. THDC 400 400 0
Eleventh FYP (in MW) 3. SJVNL 412 0 412
Typ Target Actual 4. BBMB 0 0 0
e Ce St Pri To Ce St Pri To 5. NEEPCO 600 0 600
ntr ate vat tal ntr ate vat tal 6. DVC 0 0 0
al e al e 7. NTPC (Hy- 1,920 0 1,920
Hy 8,6 3,4 3,4 15, 1,5 2,7 1,2 5,5 dro)
dro 54 82 91 62 50 02 92 44 .
7
The 24, 23, 11, 59, 12, 14, 21, 48,
rma 840 30 552 69 790 03 720 54
l 1 3 0 0
Nu- 3,3 3,3 880 88
clea 80 80 0
r
To- 36, 26, 15, 78, 15, 16, 23, 54,
tal 874 78 043 70 220 73 012 96
3 0 2 4
Source: Forty Third Report, Standing Committee on Energy (2013-14), Lok Sabha Secretariat, New Delhi

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Table-4: Status of Hydro Electric Potential Development in India

(As on 30.11.2013)
(In terms of Installed capacity-Above 25 MW)

Identified Capacity Capacity Under Capacity Under Capacity Under Capacity yet to be
Region/State as per reassess- Operation Construction Operation + Under taken up under
ment study Construction construction
Total Above (MW) (%) (MW) (%) (MW) (%) (MW) (%)
(MW) 25 MW
(MW)
NORTHERN
Jammu & Kashmir 14146 13543 2609.0 19.26 1690.0 12.48 4299.0 31.74 9244.0 68.26
Himachal Pradesh 18820 18540 7594.0 40.96 3948.0 21.29 11542.0 62.25 6998.0 37.75
Punjab 971 971 1206.3 100 206.0 21.22 1412.3 100.00 0.0 0.00
Haryana 64 64 0.0 0 0.0 0.00 0.0 0.00 64.0 100.00
Rajasthan 496 483 411.0 85.09 0.0 0.00 411.0 85.09 72.0 14.91
Uttarakhand 18175 17998 3426.4 19.04 1196.0 6.65 4622.4 25.68 13375.7 74.32
Uttar Pradesh 723 664 501.6 75.54 0.0 0.00 501.6 75.54 162.4 24.46
Sub Total (NR) 53395 52263 15748.3 30.13 7040.0 13.47 22788.3 43.60 29474.8 56.40
WESTERN
Madhya Pradesh. 2243 1970 2395.0 100 400.0 20.30 2795.0 100.00 0.0 0.00
Chhattisgarh 2242 2202 120.0 5.45 0.0 0.00 120.0 5.45 2082.0 94.55
Gujarat 619 590 550.0 93.22 0.0 0.00 550.0 93.22 40.0 6.78
Maharashtra 3769 3314 2487.0 75.05 0.0 0.00 2487.0 75.05 827.0 24.95
Goa 55 55 0.0 0.00 0.0 0.00 0.0 0.00 55.0 100.00
Sub total (WR) 8928 8131 5552.0 68.28 400.0 4.92 5952.0 73.20 2179.0 26.80
SOUTHERN
Andhra Pradesh 4424 4360 2177.8 49.95 410.0 9.40 2587.8 59.35 1772.3 40.65
Karnataka 6602 6459 3585.4 55.51 0.0 0.00 3585.4 55.51 2873.6 44.49
Kerala 3514 3378 1881.5 55.70 100.0 2.96 1981.5 58.66 1396.5 41.34
Tamil Nadu 1918 1693 1782.2 100 0.0 0.00 1782.2 100.00 0.0 0.00
Sub Total (SR) 16458 15890 9426.9 59.33 510.0 3.21 9936.9 62.54 5953.2 37.46
EASTERN
Jharkhand 753 582 170.0 29.21 0.0 0.00 170.0 29.21 412.0 70.79
Bihar 70 40 0.0 0.0 0.00 0.0 40.0 100.00
Odisha 2999 2981 2027.5 68.01 0.0 0.00 2027.5 68.01 953.5 31.99
West Bengal 2841 2829 272.2 9.62 160.0 5.66 432.2 15.28 2396.8 84.72
Sikkim 4286 4248 669.0 15.75 2322.0 54.66 2991.0 70.41 1257.0 29.59
Sub Total (ER) 10949 10680 3138.7 29.39 2482.0 23.24 5620.7 52.63 5059.3 47.37
NORTH EAST-
ERN
Meghalaya 2394 2298 282.0 12.27 40.0 1.74 322.0 14.01 1976.0 85.99
Tripura 15 0 0.0 0.0 0.0 0.0
Manipur 1784 1761 105.0 5.96 0.0 0.00 105.0 5.96 1656.0 94.04
Assam 680 650 375.0 57.69 0.0 0.00 375.0 57.69 275.0 42.31
Nagaland 1574 1452 75.0 5.17 0.0 0.00 75.0 5.17 1377.0 94.83
Arunachal Pradesh 50328 50064 405.0 0.81 2710.0 5.41 3115.0 6.22 46949.0 93.78
Mizoram 2196 2131 0.0 0.00 60.0 2.82 60.0 2.82 2071.0 97.18
Sub Total (NER) 58971 58356 1242.0 2.13 2810.0 4.82 4052.0 6.94 54304.0 93.06
ALL INDIA 148701 145320 35107.8 24.16 13242.0 9.11 48349.8 33.27 96970.2 66.73

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Table-5: Basin-wise Installed Capacity of Hydroelectric Projects (As on 31st May, 2013)
Identified capacity Capacity Under Capacity under Capacity yet to be
as per Operation construction taken up under
assessment study Construction
Total Above
Basin 25 MW
(MW) (MW) (MW) (%) (MW) (%) (MW) (%)
Indus 33832 33028 11124.3 33.68 4686.0 14.19 17217.7 52.13
Ganga 20711 20252 4987.2 24.63 1307.0 6.45 13957.6 68.92
Central 4152 3868 3147.5 81.37 400.0 10.34 320.5 8.29
Indian
Rivers
West 9430 8997 5660.7 62.92 100.0 1.11 3236.3 35.97
Flowing
Rivers
East 14511 13775 7798.2 56.61 455.0 3.30 5521.9 40.09
Flowing
Rivers
Brahma- 66065 65400 2120.0 3.24 5292.0 8.09 57988.0 88.67
putra
Basin
All India 148701 145320 34837.8 23.97 12240.0 8.42 98242.2 67.60

Source: Forty Third Report, Standing Committee on Energy (2013-14), Lok Sabha Secretariat, New Delhi

The NHPC (including NHDC) has been successful in
completing about 21 percent only. The main reason cited
for these failure are geological surprises, natural calami-
ties, environment and forest issues, and rehabilitation
and resettlement issues [8].
In Table-4, a detail list of current status of hydro projects
under various stages of implementation has been shown
regional-wise as well as state-wise. Only two states i.e.
Punjab and Madhya Pradesh have achieved 100 percent
hydro-power capacities that are under operation. On the
other hand, Goa, Bihar and Haryana are still to take up
hydro projects. The states of North-Eastern regions are
far behind in this initiative in spite of being endowed
with perennial rivers and water bodies. Except Assam up
to some extent, no other states have utilized the hydro-
power potential for solving the power shortage of the
region. Arunachal Pradesh, Sikkim and Meghalaya have
also huge potential in hydro-power generation.
India has many perennial rivers throughout the country.
Many hydro-power plants have been installed and dams
constructed for generation of power. But, it has not been
utilized up to its potential. The Brahmaputra basin has
only one percent of the total installed capacity where
China has build the worlds largest dam on it for electric-
ity generation. Only 3 percent of the total installed ca-
pacity is under operation and about 8 percent is under
construction stage in this basin. The development of
North-Eastern regions will change, if Small Hydro Pro-
jects (SHP) are encouraged by the central as well as state
governments as around 80 percent of the total capacity is
yet to be achieved.
The central Indian states have the highest installed ca-
pacity of 81 percent under operation and about 10 per-
cent is under construction stage, though in most of the
month, the area receives scarce monsoonal rain. The
west flowing rivers have also 62.92 percent under opera-
tion but only one percent is under construction. These
regions have many small streams which provide vast
opportunities for hydro-power development. The Ganga
River receives many tributaries both from the Himalayan
as well as the peninsular regions but only 24.63 percent
of potential hydro-power is in operation. Most of the
waters of this region are utilized for agriculture purpose
as the Indo-Gangetic region is the most fertile region of
the world. So, there is less opportunity for hydro-power
development in these regions. The east flowing regions
have also successfully developed projects despite many
inter-state conflicts. But, if we look at all India data, it
can be found that about 67.60 percent of hydro-power
capacity is yet to be achieved. It can be seen from the
figure-2 that there is huge differences between various
river basins in the total installed power capacity. It pro-
vides huge potential for hydro-power development in the
prosperity of these regions

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Figure-2: Hydro-Power Capacity to be taken up for
Construction
PPP Policies for Hydro-Power Development
The Government of India has taken many policy initia-
tives for sustainable hydro-power development. In 1991,
the government opened this sector for private participa-
tion and allowed 16 percent return on equity in 1992.
Thereafter, it notified Electricity Act 2003, National
Electricity Policy 2005 and Tariff Policy 2006. It also
brought out National Rehabilitation and Resettlement
Policy in 2007 to ensure adequate rehabilitation package
beyond monetary compensation through active and
transparent participation of project affected people to
address the grievances of affected families. In 2008, the
government came out with a Hydro Policy with an ob-
jective to achieve the goal of power to all by the year
2012. It encouraged private sector participation by giv-
ing many incentives for accelerating the pace of hydro-
power development. But, it failed in achieving its target
of power to all by the year 2012 as about 68 percent of
hydro-power potential is yet to be harnessed as can be
seen from table-5. These projects had been impeded in
the past due to a variety of reasons like, long gestation
period, capital intensive nature of projects, and other
problems as mentioned earlier. The successful imple-
mentation of PPP in roads, airways and other sectors has
encouraged the central as well as many state govern-
ments to implement this policy in the development of
hydro-power. Of late, the centre and many states have
initiated hydro projects through PPP and are under vari-
ous phases of implementation. The objectives of the pol-
icy are to attract investors for the development of states
water resources in an environment friendly manner and
to generate revenue for the state from development of its
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hydro resources while ensuring project viability. Odisha
adopted PPP policy in 2007, Arunachal Pradesh (2011),
Uttarakhand (2012), Andhra Pradesh and Gujarat had
framed PPP policy.
PPP is a project based on a contract or concession
agreement, between a government or statutory entity on
the one side and a private sector company on the other
side, for delivering an infrastructure service on payment
of user charges [9]. The government is now giving more
emphasis on PPP to solve budgetary constraints, faster
implementation of projects, reduced whole life costs,
better risk allocation, improved quality of service, trans-
fer of technology and projects stability. There are differ-
ent models of PPP like Build-Operate-Transfer, Build-
Own-Operate-Transfer, Design-Build-Finance-Operate-
Transfer, Build-Own-Operate-Share-Transfer, Design-
Build-Operate-Transfer, or any other models can be tak-
en according to the feasibility of the projects, environ-
mental concerns, risks associated and adequate returns
from the projects. Standard bidding processes and model
documents which include the Request For Qualification
(RFQ), Request For Proposal (RFP) and RFP For tech-
nical consultants in Transmission Systems have been
developed. The Model Transmission Agreement is ex-
pected to be finalised soon by the Ministry of Power.
PPP is guided by following core principles as given by
Uttarakhand PPP Policy-2012 [10]:
a) Value for money assessment
b) Efficient use of existing assets and optimal alloca-
tion of additional resources
c) Payment for services
d) Equitable contractual structures
e) Transparent process of procurement
f) Fair regulatory framework
g) Enabling institutional frameworks
h) Sustainable incentives and concessions
The central government as well as state governments
have formulated institutional frameworks for successful
commissioning of PPP projects. PPP cell has been insti-
tuted in the Department of Economic Affairs (DEA),
Ministry of Finance to administer various proposals and
to coordinate the activities for promoting PPP. Commit-
tee on Infrastructure (CoI) under the Chairmanship of the
Prime Minister has been constituted in 2004 with an ob-
jective to initiate policies that enable creation and man-
agement of infrastructure, facilitate mechanisms for PPP,
and monitor the progress of key infrastructure projects.
PPP Appraisal Committee (PPPAC) first gives in-
principle approval to a project put forth by a central gov-
ernment ministry/autonomous undertaking and sends it
to DEA, Planning Commission and concerned line Min-
istries for approval. Subsequent to their approval,
PPPAC gives final approval to the project. Besides these,
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 Journal of Business Management & Social Sciences Research (JBM&SSR)
Volume 4, No.2, February 2015
any other institutional frameworks can be formed as
when need arises.
There are many projects which are economically justifi-
able but not commercially viable in the immediate fu-
ture, the government encourages these projects through
Viability Gap Funding scheme to bridge the viability gap
of infrastructure projects up to a maximum of 20 percent
of project in cases where the project is awarded on com-
petitive bidding and the private party has 51 percent or
more equity stake. The hydro-power is one of the eligi-
ble sectors under this scheme.
In PPP, the risks are typically assigned to parties who are
best able to handle them. All the risks regarding design,
construction project management, quality and technical
standards, matters relating to efficiency, innovativeness
and technology are assigned to private party. Other risks
related to approvals, land acquisition, inter-governmental
co-ordinations, and agreed government funding contribu-
tions are assigned to the government. This transfer of
risks to different partners helps in division of work and
clear responsibility for failure of projects, if happens.
PPP are for long period of time, i.e. 25-30 years and this
can be extended for more years. It is most suitable for
hydro-power projects as it requires huge cost for build-
ing and its maintenance when the government is not ca-
pable to allocate much budgetary amount. The private
partners have better techniques and know-how to operate
these for longer duration through different PPP models
with better returns to ensure value for money. The pro-
jects are primarily awarded through fair and transparent
competitive bidding process. These are awarded to those
who can provide value for money, minimum damage to
environment and sustainability of the projects.
The government has changed many rules and regulations
for implementing PPP projects in different sectors. It
also came out with new The Right to Fair Compensa-
tion and Transparency in Land Acquisition, Rehabilita-
tion and Resettlement Act that stipulates mandatory
consent of at least 70 percent of affected people for ac-
quiring land for PPP projects and 80 percent for acquir-
ing land for private companies. This was enacted as the
archaic Act of 1894 suffered from various shortcomings
including silence on the issue of resettlement and reha-
bilitation of those displaced by acquisition of land [11].
International Hydro-Power Projects
through PPP
Many hydro-power projects have been initiated through-
out the world in PPP mode. Some of these have been
discussed here that provides a lesson for India to take
hydro projects for the sustainable development of back-
ward and inaccessible areas.
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Bujagali Hydro-power Project: The high cost of fuel
imports to landlocked Uganda and the absence of other
sources of energy of sufficient size, the Government of
Uganda undertaken Bujagali Hydro-power Project which
is a run-of-the-river (ROR) 250 MW project on the Nile
River in Uganda. The project is being undertaken as a
PPP between the Government of Uganda and the state
owned transmission company UETCL and private spon-
sors comprising the Aga Khan Fund for Economic De-
velopment and World Power Holdings, an affiliate of
Sithe Global Power, LLC, a private developer of power
plants in the US and formed a special purpose company
called Bujagali Energy Ltd. (BEL). It is the largest certi-
fied clean energy development project in Africa. It re-
duces Co2 emissions by almost one million tons per
year. It supports sustainable economic growth by replac-
ing polluting and expensive thermal power production
by reliance on an indigenous, renewable resource with
low emissions of greenhouse gases and avoids an in-
crease of the countrys debt burden.
Itaipu hydro-power complex: Brazil is the thirds largest
hydropower producing country in the world and home to
the giant 14,000 MW Itaipu hydro-power complex on
the Parana River through PPP model [12]. Major hydro-
power projects on Xingu, Maeira, Tapajos and Tocantins
tributaries of Amazon River are under various stages of
development through Build-Develop-Operate model. In
this model, the private sector owns the project and gets
access to a share of its revenue for a specified period of
time, with an acceptable level of risks. The public sector
achieve debt reduction, which puts it in a better position
to control issues of national interest such as safety, water
rights and resettlement and gets full ownership of the
hydro facility at the end of concession period [13].
Bunbuma II hydroelectric Project in Sierre Leone is
being developed as a PPP by a private sector developer,
Joule Africa and would increase the current generating
capacity from 50 MW to up to 372 MW[14]. It will also
provide cheap, reliable power, improving the business
environment and supporting economic growth and pov-
erty reduction in the country.
Grand Inga Hydro electric project is the worlds largest
hydropower scheme. After completion of Inga I and II,
the Inga III is going to be taken as a PPP. The advantage
of this project is that neither tens of thousands of people
to be relocated nor it would block the river as the Congo
River around Inga is so vast and falls nearly 100 metres
over a short distance, water can be diverted to create a
massive new lake without disturbing its main flow [15].
It will provide cheaper and readily available energy and
allow Africas industrial and manufacturing industry to
take off, once completed.
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help in the development of infrastructure such as roads,

Nam Theun-2 project is a 1,070 MW trans-basin diver- communications, and electricity supply to remote hilly
sion power plant on the Nam Theun River (a tributary of areas, resulting in better quality of life.
the Mekong River) in the central region of Lao PDR
through BOOT model, completed in 2009. It has been The private sectors use latest technologies that cause
designed to incorporate a complete set of economic, en- minimum damage to the environment. Hydro projects
vironment and social programmes to mitigate its effects require regular renovation and modernization for optimal
on local people and ecosystems, and to improve living capacity utilization that involves using modern equip-
standards in the areas over entire project area [16]. The ment like static excitation, microprocessors, data logger,
main objectives are to promote economic and social ad- and optical instruments [20]. It can facilitate access to
vancement of the region by providing electricity supply broader financing options, assist skill and knowledge
and earn foreign exchange from electricity export. It will development, and make possible sustainable delivery of
also provide revenue to the Lao PDR through taxes, roy- basic services, particularly hydro projects. Some of the
alties, and dividend. hydro-power projects though PPP route in India are giv-
en in the table-6.
Kabeli Project (37.6 MW) is a Greenfield peaking ROR
hydroelectric power project located on the Kabeli River, Table-6: PPP Projects under Implementation (as
a tributary of the Tamor River, in the Taplejung and on March 31, 2012)
Panchthar districts in Eastern Nepal. This is first project S. Project
through PPP BOOT model in Nepal, expected to con- No. Assam Cost
tribute to positive socio-economic development in the (Rs. crore)
local areas. Production of energy from the project has 1. Disang Small Hydro Elec- 66
been scheduled in September 2015 [17]. tric Power Projects
Uttar Pradesh
PPP Hydro-Projects in India 2. Shree Nagar Hydro Power 2,908
The controversies due to large hydro-power projects are (330 MW)
that it physically transforms rivers, inundate valuable 3. Ramganga Small Hydro 30
ecosystems, involve relocation of populations, often re- Project (SHP)(3.2MW)
sult in poorer water quality and contribute to a decline in 4. Madho-1SHP (3.75 MW) 46
the number of sh and other life-sustaining animals. In
5. Madho-2SHP (2.50 MW) 23
addition to this, due to growing resistance from the local
people who gets displaced from inundated areas as was 6. Dunda SHP (3.5 MW) 28
seen in Narmada, Sardar Sarover and Tehri Dam, the 7. Badraun SHP (14.00 MW) 119
government is now focusing more on SHP using ROR PPP Projects under Construction
design as well as towards canal-based projects. These Sikkim
ROR projects are smaller in size; have a smaller, or no, 8. Bermelee Khola HEP 21
reservoir; and are most often placed downstream of large 9. Bhasmey Hydro Power 145
hydro-power projects [18]. Plant
10. Chujachen Hydro Power 446
A typical SHP requires a settling tank, a forebay tank, a Plant
penstock for the water to flow, a powerhouse containing 11. Dikchu Hydro Power 500
the turbine at the end of the penstock, and cables to dis- Plant
tribute the energy [19]. These projects are considered 12. Hee Khola HEP Power 24
environmentally benign, particularly when compared to Plant
large hydro plants with storage reservoirs, which can 13. Kalez Khola HEP Power 48
cause habitat destruction and community displacement. Plant
The number of SHP has been doubled in the decade
14. Kissim Khola HEP Power 15
(2003-2013) because it is exempted from Environment
Plant
Impact Assessment in India.
15. Panan Hydro Power Pro- 900
ject
There is significant potential for SHP in Himalayan and
16. Rangit-IV Hydro Power 405
sub-Himalayan regions but the power evacuation and
Plan
transmission network needs expansion where PPP can
play an important role. Exploitation of the large hydro 17. Rongnichu Storage Hydro 428
potential could be used for exporting to the power deficit Power Plant
northern and western regions of the country. It will also 18. Talem HEP Power Plant 684

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19. Teesta-1 Hydro Power 1,207 construction in India till date. The project has achieved
Plant financial closure and is currently in advance stages of
20. Teesta-III Hydro Power 5,900 construction [22]. The project on completion would sup-
Project ply 12% free power to the State Government for the first
PPP Projects in Pipeline 15 years and 15% free thereafter. Full ownership would
Uttarakhand be transferred to the government after 35 years, which
21. Kho-II (SHP) 35 would significantly contribute towards GDP revenues
22. Kho-III SHP 34 and overall development of Sikkim [23].
23. Khutani SHP 190
The Bhasmey 51 MW Hydro Power Project is located in
24. Seraghat SHP 117 East District of Sikkim. The project comprises a run-of-
25. Balgad SHP 145 river plant utilizing the flows of the Rangpo River [24].
26. Purkul SHP 13 Panan Hydroelectric Project located in North Sikkim
27. Nayar SHP and 174 district of Sikkim envisages utilization of the waters of
Santudhar - II the river Rangyong a tributary of river Teesta for power
Uttar Pradesh generation on a run of river type development, harness-
28. Kairi SHP (3.75 MW) 43 ing a head of about 322m [25]. Himagiri Hydro Energy
29. Malakpur Rehdi SHP 4 45 is implementing the Panan Hydro Electric Power Project.
MW The project activity would generate annual gross energy
30. Shahjahanpur SHP 2.5 23 of 1,149,570 MWh at a PLF of 43.74% and the net ener-
MW gy available for export to grid would be 1,132,384 MWh
31. Sharda Sagar SHP 16 after deducting 1.5% towards Auxiliary consumption
32. Karamnasa SHP 15 and Transformation losses.
Sikkim
Challenges
33. Taramchu Hydro Power 163 Growing awareness among people about global warm-
Plant ing, climate change issues and the centralized manner of
Source: Draft Compendium of PPP Projects in Infra- project planning with little input from the common peo-
structure, 2012 & www.pppindiadatabase.com ple is making implementation of projects difficult. There
is widespread protest against hydro-power projects that
Shrinagar Hydro Electric Project has been developed as submerge lands, agricultural fields, forests, grazing lands
a ROR project, is a 330 MW Hydro project located on and homes on a large scale which can lead to the dis-
the Alaknanda River near the town of Shrinagar, placement of a large number of people. The villages set-
Garhwal District of Uttarakhand. It is 248 m long and tled along the river basin gets uprooted once the rivers
has a 90 m high (from deepest foundation level) dam, go dry, leading to mass migration and cultural erosion.
will utilize the net head of around 66 m between the di- Some of the main challenges faced during hydro projects
version dam and the Power House to generate electricity. execution in the country is discussed under the following
It will supply 12% of the energy to the Government of heads.
Uttarakhand at no charge and the balance 88% offtake
will go to the Uttar Pradesh Power Corporation Limited Absence of PPP Policy
(UPPCL) under a firm Power Purchase Agreement Some states have made policy while most of the states
(PPA) based on two part tariff calculation [21]. This are yet to formulate to give the private partners clear
project will be a boon for the state of UP and will help in guidelines for projects formulation and execution. Lack
improving the social conditions and welfare of people. of clarity in the PPP law(s) creates ambiguity and results
in unsustainable, unenforceable, or even illegal con-
The 1,200 MW Teesta Stage-III Hydro Electric Power tracts. The earliest failed effort on PPP in the power sec-
Project is being developed by Teesta Urja Ltd. in part- tor can be traced down to Dabhol Power Project in Ma-
nership with Government of Sikkim, PTC India Limited harashtra. The key overall issue of this PPP project was
and Athena Projects Pvt. Ltd. on Teesta River situated in that risks were not properly assessed, and equitably allo-
North District of Sikkim on BOOT (Build Own Operate cated between MSEB and Dabhol. Further project feasi-
Transfer) basis. The project is ROR designed to generate bility was not done to verify whether the project would
5214 Million kWh annually in 90% dependable year. independently run without the necessary central and state
There is a potential upside of Secondary and Excess guarantees [26].
generation of ~563 Million kWh per annum and is ex-
pected to operate at an overall Load Factor of 55%.
Teesta-III is the largest PPP hydro electric project under

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 Journal of Business Management & Social Sciences Research (JBM&SSR)
Volume 4, No.2, February 2015
Land Acquisition
The land acquisition for hydroelectric projects is a time
consuming lengthy process in India. Land is required for
various purposes like building dams, power house,
Switch yard, etc. The main occupations of people in In-
dia are agriculture and its allied activities. The people do
not want to give their fertile lands for constructing hy-
dro-power projects as they will lose their main source of
livelihood. The various protests while acquiring land for
projects are Tata Nano Project at Singur in West Bengal,
Posco project in Odisha, Reliance Powers Dadri project
in Uttar Pradesh, etc. Moreover, the states have different
policies for land purchase/allotment that also create hur-
dles while acquiring land for different purposes.
Environment and Forest issues
Hydro-power projects in the country require environ-
mental and forest clearances, which are recommended by
two separate committees besides wildlife clearances
from National Board of Wildlife. The expert appraisal
committee, which looks into environmental parameters,
is set up under the Environment Protection Act, while
the forest advisory committee, which considers the di-
version of forest land, is set up under the Forest Conser-
vation Act. These clearances takes long time to finalise
that increases the cost of the projects or its cancellation.
In India, all hydroelectric power projects have to get
environmental clearance. These clearances fall under two
categories; category A- if the projects are of capacity
more than 50 MW; category B-if capacity of projects is
between 50 to 25 MW [27]. However, SHP projects upto
25MW are exempted from obtaining environmental
clearance but have to approach State Pollution Control
Board (SPCB) for clearance under Air and Water Act
[28]. Land that is identified in forest areas can be ac-
quired only on lease basis and subject to clearances from
the forest department [29].
Natural Calamities
The Himalayan region is prone to earthquake, landslides,
cloud burst, glacial lake outbursts and flash floods. In
Uttarakhand state, SHP stations are more vulnerable to
natural calamities as their power channels are more
prone to landslides and cloud bursting. The recent devas-
tating natural disaster in the state has severely shaken the
confidence of private investors in 199 ongoing hydro-
power projects with an estimated potential of 14.4 GW
and existing 45 projects have suffered huge losses [30].
The construction activity of Teesta III project was af-
fected due to the earthquake of September 2011. Climate
change is increasing the frequency of such disasters
Law/Order Problem & Local Issues
Most of the hydro projects are constructed in hills or on
foothills. It displaces local people who have their own
law and custom and they do not want to deviate from it.
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They do not follow the states law prevailing in most
part of the state. Whenever, any projects are started in
such area, local people close the path, beat the labourers
and sit on dharnas. The state machinery takes much time
to respond in such situations. The local person wants all
the local resources for the development of their own re-
gions and creates problems when their demands are not
met. The problems due to dust, drying up of ground wa-
ter, negative effects on local agriculture and the occur-
rence of landslides which are involved in this project are
some of the local issues that affect the projects.
Inter-state Disputes
Water is a state subject under the constitution of India.
The Indian rivers run through many states and there are
many conflicts amongst them for sharing of waters. In
these situations, how hydro projects can be initiated and
the shares of each state should be distributed remains a
challenge in the long run. The dispute between Karna-
taka, Tamil Nadu and Kerala for the utilisation of Cau-
very water, Karnataka and Andhra Pradesh over
Tungbhadra River, Vansadhara dispute between Andhra
Pradesh and Odisha, Krishna dispute between
Mharashtra, Karnataka and Andhra Pradesh are some of
the examples in India. Besides these, there are some in-
ternational dispute regarding the utilisation of waters like
Indus River dispute between India and Pakistan.
Geological Surprises, Difficult Terrain & Poor Acces-
sibility
The Himalayan range is of recent origin and therefore it
is geologically quite active. Geological surprises faced
during construction lead to time and cost overruns for
hydro-power projects. A large number of hydro projects
have been delayed due to geological surprises. GVKs
Alaknanda, Baglihar, Dulhasti, Subansiri Lower,
Parvati-II and Sewa-II are some of the some of the pro-
jects. Difficult terrain, poor transportation, poor accessi-
bility and poor communication facilities of the hydro
project sites takes lot of time and money to devel-
op/maintain the infrastructures like road, establishments,
etc. causing delay in its completion [31].
Conclusion
So, India has vast potential for hydro-power develop-
ment for balanced regional development. It can ensure
not only the abridgement of gap in demand and supply
but also leads to surplus power in the country. The im-
port of oil can be curtailed to save foreign exchange and
reduce trade deficit. But, it will take long time to fully
harness the hydro-power potential as it is facing many
challenges in recent time. There is a need for central
government to set up a separate cell in partnership with
the state governments for overseeing the rehabilitation of
affected people in the state. The cell will ensure that
there is no delinquency by any government department
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Volume 4, No.2, February 2015
in providing relief and concessions [32]. The govern-
ment has amended 120-year old law for The Right to
Fair Compensation and Transparency in Land Acquisi-
tion, Rehabilitation and Resettlement Act that stipulates
mandatory consent of at least 70 percent of affected peo-
ple for acquiring land for PPP projects and 80 percent for
acquiring land for private companies [33]. Dams, if sited
and operated in a responsible manner can provide other
services, such as ood control, irrigation, potable water
reservoirs and recreational opportunities. Scientists say
that more storage projects should be taken up in the
Himalayan region to avoid Uttarakhand type disasters in
the future. The Tehri Hydro Power Project, which is a
storage project, absorbed the excess discharge in the
River Bhagirathi and helped in saving towns of
Rishikesh and Haridwar in the downstream [34]. Hydro
projects require regular renovation and modernization
for optimal capacity utilization that involves using mod-
ern equipment like static excitation, microprocessors,
data logger, and optical instruments [35]. These latest
technologies for minimizing damage to the ecology can
be provided by private partner who have latest technolo-
gies. A major part of the unexploited potential exists in
Himalayan and North Eastern regions. Therefore, it is
imperative for the country to create capacities to harness
hydro electricity potential for sustainable development of
India
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[29] ibid, p. 16.
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