- A writ petition contests the Sikkim government’s decision to disinvest its stake in the public sector company that was operating the Teesta III dam.
- The petition raises allegations of wrongful financial gain by the sitting government.
- The Teesta III dam was destroyed by a glacial lake outburst flood in October 2023 but is proposed to be rebuilt in the fragile Himalayan state, despite several environmental risks.
Weeks after the Bharatiya Janata Party’s Sikkim cadre opposed an expert body’s approval to rebuild the Teesta III hydropower project in the state, a member of the state cadre has now moved court, challenging the decision to hand over the beleaguered project to renewable energy company Greenko. The dam was destroyed by a glacial lake outburst flood (GLOF) in October 2023 but is proposed to be rebuilt in the fragile Himalayan state, despite several environmental risks.
A writ petition was filed by the BJP’s state Chief Advisor, Tseten Tashi Bhutia, in the Sikkim High Court on February 24, contesting the cabinet’s decision to disinvest its stake in Sikkim Urja Limited (SUL), the public sector company that was operating the dam. The decision to sell the government’s stake to Greenko “is arbitrary, un-reasonable and in gross violation of law,” says the petition, a copy of which was obtained by Mongabay India.
The approval by the centrally-appointed Expert Appraisal Committee (EAC) to rebuild the Teesta III HEP came months after the acquisition by Greenko was accepted by the Competition Commission of India. The EAC gave its nod to rebuild the dam on January 10 this year.
Both the state’s disinvestment from the project, and subsequent approval to rebuild the dam has been met with outrage by activists and politicians. The BJP state cadre wrote to Prime Minister Narendra Modi last month, urging him to suspend all clearances for the project till further environmental studies were done to support its viability.
“We’re not against development, but it should not be at the cost of the people residing along the shores of mighty Teesta. We worship the river,” Bhutia, who is also convenor of the Sikkim Bhutia Lepcha Apex Committee, told Mongabay India. “Those affected by the GLOF were never included in the decision to disinvest from the project.”
The petition raises serious allegations against the state government, claiming the cabinet ignored the central government’s recommendations in order to push the disinvestment through. Sikkim Chief Minister Prem Singh Tamang, however, has defended the decision and said, as per media reports, that the state government took this step to remain debt-free.
“This decision was made in the best interest of the state. Greenko was the second-largest shareholder, and it was the previous government that had entered into an agreement with them. If the government’s shares had to be transferred, they had to go to Greenko. After valuation, we handed over the project to them. Now, we are free from the burden of loans,” he reportedly said after a meeting in the assembly.
The writ petition will be heard alongside an older one filed by former Sikkim Democratic Front leader M.K. Subba, who also challenged the disinvestment last year. The next hearing for both petitions is scheduled for March 18.
Allegations in the petition
The petition alleges the state cabinet failed to adequately consider alternative options before selling its majority stake to Greenko. The state government held a 60.08% stake in Sikkim Urja Limited (SUL), while Greenko Energies – a wholly-owned subsidiary of the Mauritius-based Greenko Energy Holdings – held around 34% as the second biggest shareholder.
Shortly after the dam was destroyed, a meeting was held between the Union Minister of Power and the Sikkim Chief Minister on December 6, 2023. As per a letter quoted in the petition, during the meeting it was resolved to revive the project by applying for insurance, collecting outstanding dues from the sale of power, and requesting a two-year moratorium on the repayment of loans with interest. The Union Power Ministry also suggested SUL’s board be revamped to “bring in professional management at the helm of affairs,” the letter, quoted in the petition, says.
A cabinet memorandum drafted a few days later, on December 21, 2023, ordered these suggestions be acted on, and letters were written to the Reserve Bank of India (RBI) and the Power Finance Corporation Limited the next day requesting a waiver on loan repayments. However, a separate cabinet note sheet reveals that on the very same day the letters were sent out, the cabinet had nonetheless decided to disinvest from the project “after discussion of all the possible options and there being no alternative.”
The petition alleges the cabinet’s decision indicates “non-application of mind,” and intent for “wrongful financial gain” since the previously agreed upon course of action was not followed through, and the decision was made without waiting for responses. “There is no explanation as to why the policy adopted…in the meeting dated 06.12.2023…for the revival of the project was disregarded,” says the petition.
The final decision by the cabinet was made on February 3, 2024, after it received an offer from Greenko to acquire the government’s stake in the Teesta III HEP. According to a cabinet note from that date, the new deal would hand over all the project’s outstanding loan liabilities and pending dues, amounting to Rs. 30 billion (Rs. 3079.74 crores), to Greenko. In exchange, once commissioned, the project would supply a 6% power share to Sikkim for the first two years, eventually increasing that share to 15% over 50 years. The offer was made via a clause in the project’s shareholding agreement.
Financial consultancy PwC evaluated the offer and legal opinions were sought from senior lawyers including former Supreme Court judge Krishna Murari, the cabinet note quoted in the petition says.
The note goes on to say that if the project continued to be in possession of the state government, revenues generated from it would go towards loan repayments till 2045. But “if this proposal is approved by the Cabinet, Government of Sikkim will get its free power share post complete re-commissioning of the project, i.e. tentatively from 2027-28 onwards,” the note, as quoted in the petition, says.
The petition, however, contests these claims, arguing that a disinvestment was not necessary and that the government’s methods lacked transparency. Before the disinvestment, the state government was entitled to a 12% share of the project’s revenues, with that share increasing to 15% over a 35-year period. Audit reports show that the project was among the highest earning of all Sikkim’s public sector enterprises in the year ending March 2023, earning a revenue of Rs. 12 billion (Rs. 1,207 crores) before it was destroyed. Punjab and Haryana also owed SUL Rs. 35 billion (Rs. 3,500 crores) in dues.
“It is an admitted fact that the project was running profitably,” the petition says, adding, “The project had sufficient cash reserves for its revival, as is evident from the decision made during the meeting dated 6 December 2023 between the Union Power Minister and the Hon’ble Chief Minister of Sikkim. Furthermore, the government could have recovered Rs. 3,500 crores from Haryana and Punjab. The total amount could have exceeded Rs. 4,000 crores, making it possible to revamp the project without resorting to disinvestment of government shares.”
The petition also challenges the cabinet’s claim that a capital infusion of Rs. 40 billion (Rs. 4,000 crores) was required to make the project viable, calling it “arbitrary”. The Post Disaster Needs Assessment did not include a figure for the loss of the dam infrastructure. “A fair valuation process must be carried out by competent valuers, followed by approval from an expert disinvestment committee,” the petition states, adding, “In this case, the Cabinet comprised Hon’ble Ministers who lacked the expertise to determine the necessity of disinvestment. Therefore, they were required to rely on an expert disinvestment committee. No such committee was constituted in the present case.”
There is a “likelihood of corruption of public money,” the petition alleges, and the decision to divest was “taken in a haste and…without complying with due procedures.”
Mongabay India reached a spokesperson of the ruling party, Sikkim Krantikari Morcha, as well as legal representatives of the Government of Sikkim requesting comment on the allegations in the petition. No response was received till the time of publishing.
Renewable push
Apart from completely destroying the 1,200-megawatt hydropower project, the 2023 GLOF also killed 55 people, displaced more than 7,000 others, and led to widespread infrastructure damage to the state. A recent study analysing the GLOF and its impacts did not rule out the possibility of another flash flood in the region, owing to the region’s seismic instability.
The Expert Appraisal Committee approved plans to rebuild the dam even though crucial studies concerning its spillway capacity were incomplete. The rush to rebuild the Teesta III HEP could be partly explained by the role hydropower has in meeting India’s renewable energy targets: Large hydropower projects contributed 46.93 gigawatts out of 203.18 gigawatts of renewable energy capacity in India. The government aims to install 500 gigawatts of renewable energy capacity by 2030.
In January this year, the Ministry of Environment, Forests, and Climate Change (MoEFCC) issued an office memorandum saying that hydropower projects seeking expansion would be exempt from conducting fresh impact assessments as long as their plans didn’t involve changes in reservoir capacity or spillway capacity.
The case against the disinvestment demonstrates the complexities of hydropower and its role in a just transition, said Amitanshu Verma, a researcher with the Centre for Financial Accountability. “This situation harks back to the origins of the Teesta III HEP, which was originally supposed to be a private venture that was taken over by the government because of cost escalations in the construction phase. The project is now being considered for reconstruction, again by a private player. Are we going to have a similar situation where the private investor will find it difficult to sustain, forcing the government to step in?” said Verma.
The Teesta III HEP has a history of financial struggle. The Sikkim government came to acquire the majority stake in Sikkim Urja Limited only in 2016, when its share grew from 26% to 60.08% over a decade due to cost escalations that were met with government infusions and borrowings.
“What we need to assess in the long term is whether we’re looking at a situation where private players feel confident that the government will step in if the project fails, because it’s seen as nationally significant or contributing to renewable energy goals. These projects are becoming increasingly risky because of climate impacts. Insurance premiums are going up. If it’s that confidence that is underpinning private investments, then it’s a concern that deserves looking into,” Verma added.
Mongabay India reached a Greenko spokesperson for comments on the allegations mentioned in the petition but no response was received at the time of publication.
After this story was published, officials at the Sikkim Power Department said in an email response to Mongabay India that the allegations raised in the petitions “are contrary to the factual position and therefore are denied.” They also said that it is “neither prudent nor permissible” to respond to questions about allegations in the petition in detail, since the subject matter is sub-judice before the High Court.
Editor’s note: After the story was published, officials from the Sikkim Power Department sent an email response regarding the allegations raised in the petition. The story was updated on March 17, 2025, with their response.
Banner image: The Teesta Low Dam III. Image by A.J.T. Johnsingh via Wikimedia Commons (CC BY-SA 4.0).
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