NEW DELHI/ITANAGAR: Arunachal Pradesh, the epicentre of hydel power in India, has decided to reverse its contentious decision in 2009 to give 49% equity in its hydro-power corporation to the Naveen Jindal Group. The decision, taken last month, came after a backlash from government departments and other companies having hydel projects in the state against the joint venture, which was a departure from precedent as it effectively gave the NaveenJindal Group a stake in every upcoming hydel project in Arunachal.
“The (Arunachal) cabinet has decided to ask the Jindal Group to return its shares,” Arunachal Chief Secretary HK Paliwal told ET. Sometime in 2009, the cabinet of the Congress government, led by Dorjee Khandu, had cleared the sale of 49% in the Hydro Power Development Corporation of Arunachal Pradesh Limited (HPDCAPL) to the Naveen Jindal Group.
The state, through HPDCAPL, had committed to 11-26% equity contribution in every hydel project coming up in Arunachal, including those of other private players, adding 38,600 mw by March 2009. And Jindal’s 49% ownership of HPDCAPL would have effectively given it ownership in every project.
“This (the arrangement) looked peculiar,” says AV Kameswara Rao, executive director, PricewaterhouseCoopers, a consultancy.
“There are models where a state-owned body gives out equity. But this creates a strange situation. A state company holding equity in other projects cannot have a third party holding equity in it,” says AV Kameswara Rao of PricewaterhouseCoopers.
As companies squirmed at the idea of an uninvited private player holding equity (indirectly) in their power projects and looking into their books, the state backed down and decided to subscribe to its equity share directly, and not via HPDCAPL. “The (state) government is signing direct agreements with companies instead of going through this route,”Sanjay Kumar Saxena, the state’s current power secretary, told ET in December 2012.
How the state decided to award equity in HPDCAPL to a private player in general and Jindal in particular, is not clear. “The decision was taken by the (then) cabinet,” says Paliwal. “I do not know why it was taken. I also do not know on what basis Jindal was chosen.”
Tumke Bagra, who was the state power secretary when the decision was made, declined comment. “I am no more the power secretary. Please contact the present secretary who has access to department records,” he said in an SMS.