India’s new Power Minister Shri Suresh Prabhu, has asked World Bank president James Wolfensohn to channel some of the Bank’s additional US$ 3-4B finance into India’s power sector restructuring effort. ‘This would preferably be for run-of-river projects where survey and investigation are at an advanced stage,’ Prabu said. Adding that such projects ‘would not entail large reservoirs and extensive resettlement’.
Wolfensohn spent ten days in India from 6 November, assessing the country’s progress in power reform. Satisfied, he agreed to increase World Bank assistance to India by up to 50% over the next few years – from the current annual amount of US$2B to US$3B. The new funds will mainly be used to support state-level activities in the transition to commercial power markets. The net effect will be to enable IPPs of all kinds, including hydro power, to achieve financial closure initially in selected states.
Prabhu told a conference on hydro power, organised by the Punjab, Haryana and Delhi Chamber of Commerce and Industry, that hydro power will play a major role in meeting India’s 100GW new capacity requirement by 2012. He added that environmental issues should be made part of the project planning process, and a special purpose vehicle will look after the settlement of social and environmental issues. He also said measures would soon be taken to reduce procedural delays and suggested lower import duties, proper financing and transparent project development and implementation as ways to cut costs.
Even in the wake of the World Commission on Dams’ (WCD) report, released on 16 November 2000, Asian countries seem set to accelerate hydro power project development.
A major US Commerce Department clean energy trade mission is planning to visit New Delhi, Calcutta, Chennai and Mumbai in India from 27 November in search of contracts for clean energies, including hydro power. The mission will follow up US President Clinton’s March 2000 tour of South Asia, which attempted to interest India, Nepal, Bhutan and Bangladesh in joint hydro projects. Although that initiative failed, India is now ready to develop fresh projects on its own. The trade mission meanwhile is backed by US$200M in already agreed US Import-Export Bank credits.
voith-siemens Hydrokraftwerk has formed a joint venture with India’s JP Industries to bid for hydro EPC contracts in India and elsewhere in Asia. This is despite continuing activist pressure on Siemens for its involvement in the Maheshwar project on the Narmada river. Meanwhile, Laos began its final public hearing on the controversial Nam Theun 2 project on 22 November. Addressing the hearing, deputy prime minister Bounyang Vorachith said: ‘The government is very pleased with the [proposed] mitigating actions. A new standard has been set which will minimise negative impacts and bring the utmost benefits to Laos.’ The underlying message in all these actions is that hydro power is too central to many Asian national development goals for it to be scaled back. It provides both the rationale for China’s planned national 500kV grid and a substantial portion of eastern China’s power. Hydro’s rapid development is essential for India to achieve its development targets, and in Laos, and possibly Cambodia and Myanmar, it represents a crucial source of foreign exchange.
Recent dramatic progress in all these countries in their general economic and power sector reform, except Myanmar, means that more hydro projects will be developed now than ever before. China in particular is determined to proceed with its new five-year development plan beginning in 2001, which will enable hydro to provide 24.5% of national power by 2005.