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US$648 million World Bank loan for THDC to build 444 MW hydropower project in Uttarakhand

August 10, 2011

NEW Delhi, August 10, 2011: The World Bank today signed a US$ 648 million loan agreement with THDC India Ltd (THDC) to build the Vishnugad Pipalkoti Hydro Electric Project on the Alaknanda River in Uttarakhand, which is expected to generate an estimated 1,665 million kilowatt-hours of electricity each year to help relieve India’s chronic power shortage. 

Project Benefits:

  • 1,665 million kilowatt-hours of electricity each year
  • Peaking power for nine north Indian states
  • 1.6 million tons of GHG emissions reduced each year
  • 12 percent free power to Uttarakhand

Minimal Impacts:

  • Villages located high above the waterline; river not used for irrigation or for drinking water
  • No house or field lost to submergence
  • One-fifth of the 141.5 hectares needed acquired from local villagers; rest is government or forest land
  • Impacts on forests, wildlife, or aquatic biodiversity manageable
  • Robust plans for treating catchment area, afforestation, muck-dumping drawn up

Sharing Benefits with Local Communities:

  • Free electricity to affected households for 10 years
  • One percent of project revenues for local area development
  • Dedicated stream of funds for building village infrastructure over next five years

The 444 Megawatt Vishnugad Pipalkoti Project will provide a valuable addition of peaking power to India’s Northern Grid, which faces severe power shortages at high-consumption times.  The electricity generated from the Project will be supplied to the states of Punjab, Haryana, Rajasthan, Uttar Pradesh, Himachal Pradesh, Uttarakhand, Chandigarh, Delhi and Jammu & Kashmir.  The Project will also help reduce India’s greenhouse gas emissions by 1.6 million tons each year, compared to a thermal plant of the same capacity.

Mr Venu Rajamony, Joint Secretary Department of Economic Affairs, Ministry of Finance said “The Vishnugad Pipalkoti Project will help supply clean, carbon-friendly power to the Northern Grid at peak demand time and help reduce shortages in nine states. This project is a trend setter as far as hydroelectric projects in the country are concerned and incorporates a number of special environmental and social safeguards such as maintenance of a high minimum flow standard in the Alaknanda at all times to sustain the aquatic health of rivers; no house or field to be lost due to submergence; robust planning for afforestation, provision of free electricity to affected household for 10 years; allocation of one percent of project revenues for local area development; provision for dedicated stream of funds for building village infrastructure over next five years; allocation of 12 percent free power to the State of Uttarakhand; etc.  Special efforts are also being made to set up systems to ensure that construction of the project does not impinge upon the social and natural environment of the area; insure all houses and structures along the length of the tunnel in order to compensate villagers in case of any damage; and to build strong retaining walls around the debris dumping sites to prevent muck falling into the river; etc.”

Free Power for Uttarakhand

Apart from helping provide power at reasonable cost to those who currently have limited or no access to electricity, the Project will also provide the state of Uttarakhand with a royalty of 12 percent of the power generated, which is estimated to be around Rs. 90 crore (around US$ 20 million at current exchange rates) each year at expected tariffs.

The agreements were signed by Mr Venu Rajamony, Joint Secretary, Department of Economic Affairs, on behalf of the Government of India; Mr Deepak Sarwal, General Manager, THDC;  S. D. Sharma, Additional Resident/Investment Commissioner on behalf of the Government of Uttarakhand; and Mr Roberto Zagha, Country Director for India on behalf of the World Bank.

World Bank financing will help build project infrastructure that includes a 65-meter diversion dam near Helang village in Chamoli district of Uttarakhand to create a small reservoir in the Alaknanda River; a 13.4-kilometer headrace tunnel to carry the water to an underground powerhouse near Haat village to generate the power and; a 3 km-tailrace tunnel that will take all the diverted water back to the river.

Focus on Sustainability

There will be negligible impact on downstream water quality as a result of the Project and THDC will ensure that there is a minimum flow of 15.65 cumecs of water in the Alaknanda at all times to sustain the aquatic health of the river.  This is equivalent to approximately 45 percent of the average lean season flow in the Alaknanda and represents one of the highest minimum flow standards maintained by any hydropower project in India.

“The Vishnugad Pipalkoti Project was cleared for construction only after the Ministry of Environment & Forests studied the cumulative impacts of hydropower development on the Alaknanda basin and, as such, it incorporates important safeguards such as a higher environment flow standard,” said Mr Roberto Zagha, World Bank Country Director for India.  “The World Bank is happy to support THDC as it strives to incorporate better technical, social and environment practices into its projects.”  A part of the Bank loan to THDC will help support the company’s capacity-building program that seeks to bolster its core technical staff and develop new competencies in the areas of social and environmental management at the Project and corporate levels.

“As a responsible corporate citizen, THDC is keen to see the Indian hydropower industry move to more sustainable practices and we look forward to our continued association with the World Bank as we build out internal capacity and set up systems that will achieve this,” said Mr  R S T Sai, Chairman-cum- Managing Director, THDC India Ltd.

Located on a section of the Alaknanda where it flows through a deep, largely uninhabited gorge, the Project is expected to have minimal negative impacts on the local communities and the environment.  Detailed social and environmental impact assessments, conducted after consultations with local communities and experts, have confirmed that these impacts (see box) are manageable with identified measures.

“Large infrastructure projects often inconvenience the host communities especially during the construction phase. THDC has not only tried to reduce this burden but will also share with the local people some of the benefits that will ultimately accrue from the Project,” said Mr Michael Haney, Senior Energy Specialist and Task Team Leader for the Vishnugad Pipalkoti Hydroelectric Project.

Reducing Local Impacts

THDC has put into place systems to see that construction of the project does not needlessly impinge upon the social and natural environment of the area.  It has decided to excavate the headrace tunnel with a Tunnel Boring Machine so that noise and dust emissions are reduced, and the nearby villages are not disturbed by vibrations from blasting.

THDC has also decided to insure all houses and structures in a defined corridor along the length of the tunnel so that the villagers living in the vicinity can be duly compensated in case any damage does occur as a consequence of the excavation.  The company has also identified specific locations where debris generated by the Project will be disposed of.  These areas will have strong retaining walls built so that no muck falls into the river.

Sharing benefits

Once the Project begins generation, each household affected by the Project will receive 100 kWh of free electricity every month for 10 years.  THDC will also make available one percent of the annual revenue of the Project for the development of the local area and can be used to build hospitals, roads, water supply schemes etc.  This is apart from Rs 310 million that THDC will provide to help build community infrastructure (like footpaths, footbridges, panchayat ghars etc) in project-affected villages over the next five years.

The low-interest loan, from the International Bank for Reconstruction and Development (IBRD), has a six-year grace period, and a maturity of 29 years.


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