Beyond the Indus Water Treaty: A Perspective on Kashmir’s “Power” Woes

Among the many issues that impinge on the relationship between the state of Jammu and Kashmir (J&K) and the Government of India, two issues came up for serious debate during 2011. The first was that of the Armed Forces Special Powers Act (AFSPA), and the second was that of securing a better deal for the State in terms of using and developing its hydropower potential. While the first issue is primarily a concern for the people of the Kashmir Valley, the latter affects the whole state, though the voices raised are, again, mainly from the Kashmir Valley. The two issues came together on January 2, 2012, when a demonstration to protest the shortage of power supply in the freezing Kashmir Valley culminated in the death of a young boy. The involvement of Central Industrial Security Force (CISF) personnel, who were responsible for the security of the National Hydroelectric Power Corporation Limited (NHPC) power project, Uri-I, near Boniyar, brought back memories of the unrest of 2010. While a serious debate on the AFSPA is already underway—and this incident has raised more questions for consideration by all the stakeholders—issues that strain centre-state relations vis-à-vis power shortage in J&K need to be put in perspective.

At the core of the Kashmiri discourse on the shortage of power is the distribution of water resources that was agreed to between India and Pakistan through the instrumentality of the Indus Water Treaty (1960). The argument made in the documents of the Government of J&K is that of the estimated potential of 20,000 MW (identified potential being 16480 MW) of the Indus River Basin, a large percentage of which cannot be harnessed for the benefit of the state as the Indus Water Treaty only allows for run-of-the-river projects that do not affect the riparian rights of Pakistan. These, it is argued, reduce the power production to a third of the full potential. During 2011, for the first time since 1960, the Government of J&K appointed a consultant to quantify the losses to the state occurring due to the Indus Water Treaty. At the same time, the State Finance Commission is reported to have recommended that Pakistan must also be made to pay for the losses to the J&K exchequer. However, one needs to explore ways of addressing issues of power shortage in the state while being mindful of the needs and sensitivities of lower riparian Pakistan.

In this regard it is important to bear in mind that the J&K State Hydroelectric Projects Development Policy 2011, unveiled in July of that year, clearly spells out plans for setting up several power plants of varying capacities under the state, central, and private sector, which, when completed, will result in the production of 5,756.5 MW of electricity. It is estimated that the state’s power demand is likely to be 2,600 MW in 2012–13 and 5,500 MW by 2025–26. It has also been stated that the state will enjoy a power surplus by 2018. Given these figures, one can safely conclude that the state’s requirements can easily be fulfilled, provided adequate capacities are built quickly.

A second issue of concern for the state and the people of the valley vis-à-vis the Government of India is the continuing ownership of three of the state’s hydel power projects—Salal (Reasi district), Dulhasti (Kishtwar district), and Uri-I (Baramula district) —by the NHPC. In December 2010, the state government set up a cabinet sub-committee (CSC) to look into issues of power sharing and other related issues with the NHPC. Through 2011, CSC members and civil society activists in the valley organized a series of seminars with the aim of exerting pressure on the state government to reclaim these projects. A showdown seems imminent. According to media reports, the CSC has, in its report submitted to the state government on January 3, 2012, recommended that Uri-I and Salal projects be bought back from the NHPC; but the NHPC is categorically refusing to hand over these projects to the state.

In this regard, it is important to bear in mind that the contribution of the central sector in the state’s power production will gradually decline. Currently, there are four projects being executed by the NHPC in the central sector (1,680 MW), with 20 projects in the state sector (758 MW) and two in the private sector (17.50 MW). Among the projects currently under execution, those under the independent power production (IPP) mode account for the largest MW; among those planned, power projects under the state sector will account for the highest numbers.1 Moreover, according to experts, a joint venture model of NHPC and the state government, as in the Chenab Valley Power Projects Ltd., could go a long way in harnessing the hydro potential located in difficult, geo-technically challenging terrain. NHPC, by way of working on projects in J&K, possesses the requisite experience and has the capability to pool the expertise required for successful implementation of such projects.

A third related issue causing much angst is about the state receiving only 12 per cent free power as royalty from the NHPC projects. Hence, objections are being raised about several new projects that have been given to the NHPC for execution. This is particularly alarming as nearly Rs 2,000 crore, around a third of the state’s annual plan budget, is spent on purchasing power. Much of this power is purchased from the Northern Grid, to which the J&K itself contributes (this is so in the case of all other states as well).

It is thus important to bear in mind that the NHPC follows the policy prescription of the Ministry of Power regarding the percentage of free power to be given to the state whose water resources it is using. Across the country, the NHPC is currently operating 14 projects, four of which are in J&K. The state’s projects contribute a substantial 1,680 MW out of a total of 5,295 MW to the NHPC’s production capacity.2 In all these projects, the NHPC is obligated to provide 12 per cent free power to the states and an additional one per cent for local area development, as per the Hydropower Policy of the Government of India (2009).3 While the merits of this policy itself may be questioned, there is no case of discrimination against J&K. Also, in the execution of projects between 2 to 100 MW by various modes, the guidelines laid down in the J&K State Hydroelectric Projects Development Policy 2011 will be followed. The Policy makes a provision for free power of not less than 15 per cent, and an additional one per cent as local area development fund to be borne by the executor. The terminal value to be paid to the executor will not be more than 10 per cent of the estimated cost. So, at least, in the case of projects that are in the said range, power production will take place on the terms set by the state government.

Several allegations have been made against the NHPC: that it has not kept it promises regarding supply of power to villages around the Uri-I project; that most of its senior technical employees are from other parts of India whereas they are mandated to be from J&K; that contrary to the agreement on the amount to be paid by the State for the power purchased from the Salal project, Rs 2,340 core were paid in excess to the NHPC; and that as per the Jammu and Kashmir Water Resources (Regulation and Management) Act 2010, whereby all companies running hydel projects are required to pay for water usage, there are doubts about whether the NHPC has paid these dues. Since public clarifications from the NHPC have not been forthcoming, there is room for speculation on these issues.

As the state battles power shortages, one crucial power project, namely the Kishenganga Project (Bandipore district), on a tributary of the Jhelum, ran into rough weather with several objections being raised regarding (1) the pollution caused by its stone-crushing unit, (2) failure to rebuild roads that were destroyed, (3) acquisition versus lease of land for the project, (4) displacement of the Dard-Sheena tribe from their land, and (5) destruction of the flora and fauna of the area. Leaders across the political spectrum exerted considerable pressure on the state government, which has now asked the NHPC to submit a detailed report to the Environment Committee of the state Legislative Assembly. Other issues that are often highlighted pertain to delays in implementation of projects; tardiness in realization of revenue from users of electricity, of which state and central government departments are the main defaulters; only 50 per cent (approximately) metering being completed for revenue collection; shortage of manpower in the Power Development Department leading to delays in repairs and restoration work; and nearly 60 per cent power being lost in transmission and distribution as compared to the national average of 28 per cent.

For the present, the argument against everything “central” must be moderated by the fact that large grants are being given to J&K and these are being used to improve the state’s capacities in power generation. Thus under the Prime Minister’s Reconstruction Programme, out of Rs 24,000 crore, Rs 18,912.25 crore have been earmarked for development of power in J&K. This includes Rs 14,952.41 crore in the central sector projects for power generation and Rs 2,811 crore for strengthening the transmission and distribution network.4 In addition, the National Hydropower Policy stipulates that up to a certain distance from the power project, the centre will provide 90 per cent funds for power transmission projects under the Rajiv Gandhi Grameen Vidyutikaran Yojana, and the project authority will bear the cost of the state’s share of 10 per cent.

That said, it is imperative that commitments made for local area development must be honoured and environmental concerns addressed. Also, claims of the state vis-à-vis the NHPC, if any, based on agreements concluded much before the new policies were announced, must be dealt with in a fair manner. It is imperative that all this be done in a time-bound manner in order to alleviate the power shortages. Declining levels of violence in the valley provide the necessary environment for focusing on the development needs of J&K. Not only will these measures benefit the three regions of the state, but they will also go a long way in bridging the trust deficit between the people of the valley and the Government of India.

• 1. See J&K State Hydroelectric Projects Development Policy 2011, p. 5, and Annexure I, p. 20.
• 2. For the list of NHPC power stations as on December 28, 2010, see http://nhpcindia.com/english/scripts/Projects_POwerstation.aspx, accessed on January, 10, 2012.
• 3. Ministry of Power, New Hydro Power Policy, available at http://www.powermin.nic.in/whats_new/pdf/new_hydro_policy.pdf, p. 34, accessed on January 10, 2012.
• 4. Government of Jammu and Kashmir, Economic Survey 2008-09, p. 382. The state government does not view this favourably though.