Why Singoli-Bhatwari Project is Loss to the Country?

Singoli-Bhatwari| Singoli-Bhatwari Hydropower Project| L&T Uttaranchal Limited| Mandakini River| Larsen & Toubro Limited| L&T| Vishnuprayag Project|

Damaged barrage of Singoli-Bhatwari in 2013 Kedarnath floods

The Mandakini River flows from Kedarnath on which the Singoli-Bhatwari Hydropower Project is being made. This Project was deeply affected in 2013 floods. The project is being made by L&T Uttaranchal Limited (LTU), which is a subsidiary of Larsen & Toubro Limited. The Government of Uttarakhand made an agreement with LTU on 26 November 2009 according to which LTU was required to commission the project by 26 November 2015. However, the project was affected by the floods of 2013. So there was some delay in the project which was not in the control of L&T Uttaranchal.

The Vishnuprayag Project was similarly affected. The barrage of both the projects had got washed out.  The owner of Vishnuprayag Project was able to rebuild the barrage and restart the project within a period of ten months. Therefore, we can assume that the delay in Singoli-Bhatwari due to the 2013 floods would also be about ten months. Actually it would be less because this barrage was under construction while the barrage of Vishnuprayag was in operation. Therefore, taking this into account the project should have been commissioned by 20 November 2016. But it not been commissioned till date.

Government of Uttarakhand| Buyout | Realisable Value of Assets| Agreement|

A portion of agreement held between LTU and GOUK describing of buying out the Singoli-Bhatwari Project

According to the agreement made with the Government of Uttarakhand, if the company cannot adhere to the terms of the contract, which includes commissioning of the projects in due time, then the government can buyout the project. If the Government does this, then it has to pay to the company 75% of the Realisable Value of Assets like the turbine, the vehicles or whatever assets the company has created. The Realisable Value if the price at which the assets are sold in the market. For example if assets are sold for Rs 400 Crores then the Government has to pay Rs 300 Crores to LTU. The Government of Uttarakhand will actually make a profit of Rs 100 Crores by buying out this project.

India Energy Exchange|Peaking Power| Uttarakhand| People of Uttarakhand| Price of Electricity|

Rate of electricity offered by the Singoli-Bhatwari Project to the people of Uttarakhand

The project has offered to provide electricity to the Government of Uttarakhand at Rs 4.25 per unit. The same electricity is available today at Rs 3.20 per unit on the India Energy Exchange. The average price of peaking power on the India Energy Exchange during 2018-19 was about Rs 3.85 per unit. Therefore, if the Government still wants to complete this project and wants to purchases electricity at Rs 4.25 per unit, then the people of Uttarakhand will have to pay an additional price of Rs 0.40 per unit which works out to Rs 161 Crores over the lifetime of the project.

Benefit of Buying Out| Purulia Pump Storage Project| Environmental Cost| Loss of Biodiversity| Quality of Water|

Estimated environmental cost of the Singoli-Bhatwari Hydropower Project taking the Purulia Project as the benchmark.

Another benefit of buying out and closing this project is that of environment. Let us take the example of the Purulia Pump Storage Project. A study of this project by Vidyasagar University found that the Direct Cost of the project was Rs 764 Crores but the Environmental Cost was Rs 5055 Crores. The total cost of project was Rs 5819 Crores.

The Direct Cost of the Singoli-Bhatwari Project is Rs 568 Crores. Taking the same ratio as Purulia, we can say that and the Environmental Cost of Singoli-Bhatwari Project would be Rs 3433 Crores. Therefore, if the Government decides to buyout and close this project, then the People of Uttarakhand will be saved from paying this huge amount of Rs 3433 Crores due to loss of environment. These losses include the value deterioration in quality of water, the loss of biodiversity, loss from the fact that the people cannot immerse ashes of their dead into a flowing river and the loss of sand and fishes to the local people. Therefore, total benefit to the Uttarakhand will Rs 4115 Crores if the project is bought out.

Water of free-flowing Mandakini River will be diverted into a tunnel by the Singoli-Bhatwari Hydropower Project
Rare flowers growing in the area of Singoli-Bhatwari
Gharial is a rare animal found in the area of Singoli-Bhatwari
These Baboons (Langoor) will lose their habitat due to the Singoli-Bhatwari Hydropower Project
Uttarakhand Government| Royalty| Employment| Infrastructure | High Price of Electricity|
Benefits provided by the Singoli-Bhatwari Project over its lifetime.

On the other hand, the Government will lose the 12% royalty which the project will pay over its lifetime. We have valued this lifetime benefit foregone at Rs 177 Crores. The employment benefit foregone is valued at Rs 21 Crores and infrastructure benefit foregone is valued at Rs 6 Crores. Therefore the total benefits foregone from closing this project are Rs 204 Crores.

The total picture is that the direct benefits gained from closure will be about Rs 361 Crores whereas the direct benefits foregone will be Rs 204 Crores. Therefore it is eminently reasonable for the Government of Uttarakhand to buyout this project and close it. The case for closure of the Project becomes stronger if we include the benefits from not having to incur the environmental costs of Rs 3433 Crores.

Expensive Hydropower| Solar Power| Himachal Pradesh| Cost of Hydropower|

We had discussions with the officials of the Government of Uttarakhand about closing this project. They said that it will send the message that we don’t want hydropower. Perhaps that is the way to go because Uttarakhand can make much more profit by shifting from expensive hydropower to inexpensive solar power. Hydropower is no longer viable because of the high cost. The officials of the Government also said that they want to emulate the example of Himachal Pradesh which has developed a large number of hydropower projects. Perhaps this has happened because these projects were made when cost of making of these projects was less and the cost of solar power was more. Today these projects are not viable.

 Therefore Government of Uttarakhand should buy out this project and relieve the people of Uttarakhand from both the economic and environmental costs which will be perpetrated by the continuation of this project.