On the one hand, New Delhi is holding the fate of the state to ransom-no one knows for sure what will be the final outcome of boundary settlement with China and on the other hand, as some quarters feels, the policy maker’s of our own state is holding the future of the state to ransom. And that too, despite the warning and protest by them not to mortgage the future of the state.
On 24th June evening, a cheque of Rs. 225 Crores exchanged hands between S. K. Garg, CMD of National Hydroelectric Power Corporation Limited and Dorjee Khandu, Chief Minister of Arunachal Pradesh, which the state government is taking as an advance to be adjusted against 12 per cent free power share (water royalty) in future, on the pretext of reviving the state owned sick Apex Bank.
When the state government announced their plan to revive the sick state owned Apex Bank by taking some amount as an advance against revenue to be accrued from ‘water royalty’ (free power) from the Hydro Developers in the state, it was presumed that advance would be given to the state government without any additional rider-just as a simple token for allowing them to take up Hydroelectric Project in the state. But, I forgot, they all are business institutions and there is a way to do business. And indeed, the Rs. 225 Crore advance given by NHPC Ltd. against 12 per cent free power of 750 MW each Tawang-I & Tawang-II Hydroelectric project and 3000 MW Dibang Multipurpose Hydroelectric Project was not without a rider, it was with an interest at a rate of 9% per annum to be compounded annually which was to be adjusted only after commissioning of the project. And this, the government feels, is a miniscule amount and would not over burden the debt service liability of over Rs. 1000 Crores that it presently has.
“[..] the state government would pay interest of 9% for the amount only after commissioning of the projects, including 2000 MW Lower Subansiri Project at Gerukamukh, which would be adjusted from the 12 pc free power to be provided to the state by the corporation, he added. When his attention was drawn to large protests by various quarters for taking advance and thereby mortgaging the future of the state, Sanjay clarified that the state already had a debt service liability of over Rs.1,000 Crores and this small amount would not be a burden. Some sections were trying to sabotage the government initiative, which was a serious threat to the state development, he commented.”
– Echo of Arunachal
Was the move smart enough?
I would say, surely, but in the context of National Hydroelectric Power Corporation Limited alone. By extending this advance or should I say, a loan of Rs. 225 Crores, NHPC Ltd. has made a clever business move. Basically, any Hydro Power Developer would have started earning only after commissioning and commercial operation of the project, but here in this case, NHPC Ltd. would be earning right from signing of MoA. Now, technically, they have all the rights to execute these mega projects namely, 750 MW Tawang-I HEP, 750 MW Tawang-II HEP and 3000 MW Dibang Multipurpose HEP. And with this deal they have clinched 3000 MW Dibang Multipurpose Hydroelectric Project from the state government and would now be developing alone which was earlier announced as a Joint Venture between the State Government and NHPC Ltd.-which, I thought then, was the only sensible step that the State Government took in these entire exercise of tapping the Hydro Power of the state. But now that too has gone to NHPC Ltd.
By asking for this advance/loan of Rs. 225 Crores the State Government has actually set itself back by at least 1 ½ years. Considering the long gestation period of any Hydroelectric Project-here 9 years for Dibang Multipurpose Project, 6 & ½ years for Tawang-I Project and 6 years for Tawang-II Project (Source-NHPC Ltd.), if we assume that all the three projects are up and running by 9th year (the time that would be required for construction and commissioning of Dibang Multipurpose Project) from now and with the 2268.78 MU (Million Units) of energy that the state would receive as a 12% free power from 18906.5 MU of energy generated by these mega projects in a 90% dependable year (Source NHPC Ltd.) and with a tariff of say @ Rs.1.64 per unit (levellised tariff for Tawang-I Project), we may actually end up earning from these projects only after 2nd year of commissioning of these projects, thereby, as felt by some quarters, mortgaging the future of the state by 2 years.
Coming to the main purpose of taking this advance; the state government is contemplating engaging private consultancy firms from Kolkata and Mumbai for evolving management system in the Arunachal Pradesh State Apex Cooperative Bank to run it with professionalism after its revival. But would the sick Apex Bank indeed be revived? I’ve my apprehension's though. And if the state government keeps on making such deals to cover-up for their mismanagement instead of bringing the culprit to book and recover the amount, the claim of Aruanchal Pradesh becoming the richest state in the country when the state starts earning revenue in the form of free power from these Mega Projects, seems quite vague to me.
And coming back to the question 'was the move smart enough?', I'd say yes. Now, the people are left guessing how soon can they withdraw their money and close their accounts.
Update (17-07-2007): Hmmm.....the wait of the poor customers' would be ending soon for the CM has announced reopening of the State owned Apex Bank from August 2.
"About 65,000 account holders of Arunachal Pradesh State Cooperative Apex Bank have reasons to cheer with Chief Minister Dorjee Khandu today announcing its reopening from August 2 next."
-The Arunachal Times
Hope the Cheer of Account Holders are not short lived.