Citing commercial confidence, NHPC has refused transparency about return of J&K hydel projects

2016_2$largeimg213_Feb_2016_010428817By Venkatesh Nayak*

Readers will remember my RTI intervention circulated in April 2016 about the National Hydroelectric Power Corporation’s (NHPC’s) refusal to disclose information about the return (and not buyback) of hydel projects in Jammu and Kashmir (J&K). NHPC is a profit-making public sector enterprise under the Government of India (GoI) and runs several hydel projects across the country. Earlier this year, when I asked the Union Ministry of Power for all correspondence with the Government of J&K (GoJ&K) relating to these projects, the Ministry washed its hands off the issue by transferring the RTI application to the NHPC which is responsible for the execution, maintenance and management of these projects. NHPC invoked Section 8(1)(d) of the Central Right to Information Act, 2005 (Central RTI Act) claiming that disclosure would “affect” its commercial interests.

Later on I submitted a first appeal to the NHPC’s First Appellate Authority (FAA) contesting the reply of the Central Public Information Officer (CPIO) on various substantial and technical grounds. I argued that NHPC cannot claim for itself the status of second party (being the custodian of the requested information) and also a “third party” whose commercial interests would be affected. This argument is absurd in law

NHPC’s First Appellate Authority parrots the CPIO’s decision to reject access to all information

The NHPC’s FAA has done an encore of the CPIO’s performance by upholding the decision to reject access to all information held by them about the correspondence with GoJ&K. Not only has he refused to apply his own mind to the case, instead, he has relied completely on the opinion of the deemed CPIO [under Section 5(4) of the Central RTI Act] who is the custodian of information to uphold the rejection. The FAA has ruled in my case as follows:

“I have carefully examined the appeal viz-a-viz correspondence made between the CPIO, the deemed PIO and the appellant and it has been observed there is no denial in providing information as per the Act. The reply as supplied by the Planning Division, Corporate Office being deemed PIO as per Section 5(5) of the RTI Act vide their IOM no. NH/PD/RTI/703 dated 16/03/2016, has been furnished to the applicant by CPIO, NHPC vide letter no. NH/RTI/186/2016/2817-17 dated 17/03/2016. It has also been observed that the deemed PIO resorted the exemption under Section 8(1)(d) of RTI Act being information related to commercial confidence, which was however inadvertently typed as Section 8(d) instead of Section 8(1)(d) of the RTI Act, 2005.

“The appeal forwarded to Planning Division, Corporate Office with the request to review the information/reply provided against his application and offer comments on the appeal, vide IOM no. NH/RTI/Appeal/25/2016/224 dated 29/04/2016. Responding to the same, deemed PIO i.e, Planning Division replied vide their IOM no. NH/PD/RTI/1105 dated 10/05/2016 that ‘NHPC is a Central Public Sector Undertaking (CPSU), it is a listed company in the stock market’. The information sought by the applicant is sensitive and directly related to the business of the company. Also, the issue is between the parties MoP/NHPC & GoJK. The disclosure shall lead to unwarranted speculations and confusion among the shareholders and shall affect the commercial confidence of NHPC. The disclosure of such information affecting the commercial confidence is eempted in terms of section 8(1)(d) of RTI Act, which says that:

“Information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information”.

What is problematic with this order?

There are several problems with this order. First, the FAA has simply not appreciated the fact that the protection of Section 8(1)(d) of the Central RTI Act is not available to the NHPC. It could have been legitimately claimed by the Union Power Ministry if it had disposed the RTI application on its own. Then NHPC would have become a third party to the case (because the Union Power Ministry would have been the 2nd party, namely the Respondent Public Authority). The FAA has simply not recognised the fallacy in the CPIO’s reply while upholding it.

Second, the FAA has claimed that NHPC being a listed company, whose stocks are traded in the stock exchange, its shareholders would be confused if details of the correspondence between GoI & GoJ&K were to be released in the public domain.

In fact, the confusion is created by the contradictory statements made by authorities under the GoI. In March 2015, the Union Minister of State for Power replied to a question raised in the Lok Sabha by Jenaab Tariq Hameed Karra, MP elected from Srinagar, stating that the Government has not accepted the Task Force’s recommendation of return of projects. The Minister replied as follows:

“The Task Force on the development of Jammu & Kashmir recommended transfer of certain Power Projects of NHPC including Dulhasti Hydroelectric Project (HEP) to State Government. The recommendation was considered by the Union Government and not accepted as the power generated from the project has already been allocated to various States including J&K. Also the transfer of the project is likely to entail considerable financial, non-financial and legal problems.”

The RTI reply I received earlier this year from NHPC and now the FAA’s order indicate that the issue has not been resolved yet. So the confusion is created by the official secrecy that is plaguing the discussions. The confusion can be cleared up by disclosing information relating to the correspondence between GoI and GoJ&K.

What is the shareholding pattern of NHPC?

The NHPC’s stocks are listed on the Bombay and National Stock Exchanges according to its Annual Report for 2014-15 (page 46). According to documents uploaded for the financial quarter ending in March 2016 on the NHPC website, the Hon’ble President of India i.e., the Central Government holds 85.96% of the shares of NHPC. Thanks to disinvestment over multiple phases, the remaining shares of NHPC are held by the following:

1) Individual shareholders – 6.22%

2) Life Insurance Corporation of India – 3.44%

3) Foreign Portfolio Investors – 2.59%

4) Financial Institutions and Banks – 0.83% (the quality of the scanned document put up on NHPC’s website does little justice to its status as a hugely profitable company flush with funds)

5) The remaining shares are said to be held by NBFCs registered with the Reserve Bank of India, one foreign national and one foreign corporate body. 4,739 NRIs are amongst the individuals shareholders of NHPC.

However, neither the NHPC’s Annual Reports nor the public documents available on MCA21 (Union Ministry of Corporate Affairs’ official website for corporations and Limited Liability Partnerships) list the names of individuals who own the share of NHPC.

According to data obtained through another RTI intervention of mine earlier this year, NHPC earned Rs. 194 billion from sale of power generated at the 7 hydel projects in J&K over a period of 14 years from 2001-2015. Of this total amount, Rs. 41 billion was paid by J&K to NHPC for consuming power within the State. 12% of the remaining power generated in J&K was supplied free of charge to J&K as per the MoU signed in July, 2000. NHPC provided a copy of this MoU also under the Central RTI Act earlier.

It would be interesting to find out how many residents of J&K or NRIs of Kashmiri origin are shareholders of NHPC in the “Individuals” category. I am requesting readers to submit RTI applications to NHPC and Bombay Stock Exchange, National Stock Exchange and SEBI to obtain this data.

Why is transparency of negotiations important?

Third, after the media in J&K went to town about the amount of revenue that NHPC had earned in J&K (J&K accounts for 40% of the power generated by NHPC at its hydel projects across the country) thanks to the RTI intervention, the issue of return of projects – an essential clause in the 2000 MoU signed between GoI and GoJ&K was debated widely across J&K. Political leaders and civil society called for an urgent discussion on the return of the projects as the MoU between GoI and GoJ&K regarding the 7 hydel projects in J&K was for a 10 year period only. Only when the authorities such as NHPC and GoJ&K place more information about the discussions in the public domain, will people be able to debate the issue in a more informed manner. In a democracy government has the duty to take the people into confidence by being transparent.

When the current Chief Minister of J&K Ms. Mehbooba Mufti, raised a query as a member of the Lok Sabha in August 2014 about the amount of revenue generated by NHPC projects up to 2013-14, the Union Minister of State for Power assured her that the information was being collected. It is not clear whether the information was supplied to her eventually or not. Now as the Chief Minister of the State, she can obtain this information easily. In any case the NHPC provided this data in response to my RTI application which is in the public domain. The J&K State Government can do better than NHPC and publicise the official records its holds about the correspondence with GoI concerning the return of the hdyel projects. Now that the J&K Legislature is in session, I hope the political leaders supported by civil society actors will demand transparency from the State Government.

If, perchance, the State Government is also unwilling to volunteer this information, concerned citizens and RTI activists in J&K can seek this information from the State Government under the J&K RTI Act. Being an outsider, I am not permitted to seek information under the J&K RTI Act, which is an irony. Readers may suitably adapt the RTI queries from my application and use them in J&K.

When the issue of return of projects has always been a matter of public debate in J&K, NHPC’s contention that disclosure of details of the correspondence between GoI and GoJ&K does not sound very convincing.  After all, NHPC being a primary beneficiary of the exploitation of the water resources in J&K has a greater duty to the people of J&K vis-a-vis transparency as compared to the duty it is performing towards its shareholders by maintaining secrecy.

Further, almost 90% of NHPC’s shares are controlled by the Central Government directly and through LIC. So it should not be difficult for NHPC to take measures to explain the issue to 10% of its public shareholders and make way for more transparency about the discussion on the return of the hydel projects. If the inclination towards transparency is there, practicing it will not be difficult.

*Programme Coordinator, Access to Information Programme, Commonwealth Human Rights Initiative, New Delhi

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