Privatisation & Reconstruction: The Many Controversies Around Teesta Stage 3

KOMAL CHAMLING

Introduction

On February 5, 2025, after a session of the Sikkim Legislative Assembly, Chief Minister P.S. Golay defended the decision to rebuild the Teesta Stage 3 Dam, arguing that the loan of Rs 3,200 crores taken by the previous SDF government to construct the project needed to be repaid. He further justified the government’s disinvestment of its 60.08% stake in Teesta Stage 3 to Greenko Energies Private Limited (GEPL), citing this debt as the primary reason. However, this explanation raises serious questions, particularly given the hasty disinvestment just months before the 2024 General Elections. Additionally, the rushed clearance for the dam’s reconstruction, without public hearings or fresh environmental assessments, points to a larger issue—whether commercial interests have been placed above the well-being of the state and its people.

Was Teesta Stage 3 Really a Debt Burden?

On 3rd February, 2024, the Power Department, Government of Sikkim, issued a notice (Ref No: 36/Works/Power/CE/P KG) 2023-24/219) to Sikkim Power Valley Transmission Limited (SPVTL), communicating the State Cabinet’s decision to disinvest its entire 60.08% stake in the project. The notice confirmed that GEPL would take over the Sikkim Power Investment Corporation Loan (SPICL-PFC) amounting to Rs 2,895.46 crores, along with the principal component of the SBS loan, which stood at Rs 184.28 crores.

The debt argument might have been valid if Sikkim Urja Limited (SUL), the state-owned company managing the hydropower project, had been operating at a loss. However, SUL reported a profit of Rs 230 crores in FY 2021-22 and a staggering Rs 1,270.19 crores in FY 2022-23. At the time of the Glacial Lake Outburst Flood (GLOF) in October 2024, SUL had Rs 1,000 crores in cash reserves and Rs 3,500 crores in receivables from Punjab and Haryana DISCOMs. This alone would have been sufficient to refinance the debt.

Following the GLOF, a meeting was held on 6th December, 2023, between the Ministry of Power and NRE, Government of India, and Chief Minister P.S. Golay to discuss the revival of the project. The Ministry of Power recommended updating the Rs 1,500 crores receivables from Haryana and Rs 2,000 crores from Punjab Power Finance Corporation (PFC) on the PRAAPTI Portal. This key decision among others were communicated to the Government of Sikkim via a letter (F.No.14-4/10/2023-H.I(270437)) dated 26th December, 2023. Given these financial factors, SUL was far from being a financial liability. Furthermore, only 25% of the total project debt remained—an amount that, had the GLOF not occurred, could have been repaid till date, making the government-owned project debt-free.

The Disinvestment to Greenko: Procedural Lapses and Lack of Transparency

Despite the Ministry of Power’s recommendations, the Sikkim government proceeded with the disinvestment of its 60.08% stake in SUL to GEPL on 2nd February, 2024. This decision is particularly questionable, considering the project’s profitability and the Rs 3,500 crores in outstanding receivables from DISCOMs.

Further compounding the controversy, the disinvestment process bypassed multiple legal and administrative norms. The sale did not comply with the General Principles of Disinvestment, Notifications on the Disinvestment of Public Sector Undertakings, or the Sikkim Financial Amendment Rules. No competitive bidding process or Expression of Interest was invited, as is mandatory in such transactions. Additionally, the project’s valuation was not independently assessed before the sale. The decision to privatize a major public asset, without transparency or competitive evaluation, raises concerns about undue political and commercial motivations. 

Was the SDF Government Responsible for Greenko’s Entry?

A key argument put forth by P.S. Golay is that the previous SDF government had already signed a deal with Greenko. However, the facts tell a different story. Greenko acquired shares of Asian Infrastructure Private Limited in 2020—a transaction that took place between two private entities and did not alter the government’s majority stake in the project. The critical turning point came on 2nd February, 2024, when the SKM government approved the sale of its entire 60.08% stake to Greenko, effectively privatizing Teesta Stage 3. Unlike the earlier private share transfer, this decision by the SKM Government transferred full control of a profit-making public asset to a private entity. 

Dubious Insurance Claims: Cloudburst vs. GLOF

Adding to the controversy, the SKM government has also repeatedly approached the Jal Shakti Ministry, insisting that the Teesta Stage 3 disaster was caused by a cloudburst, despite overwhelming scientific evidence proving otherwise. A High-Level Committee headed by R.K. Jain, former Chairman of the Central Water Commission (CWC), concluded that the disaster was caused by a GLOF—a finding corroborated by multiple research studies.

The distinction between a cloudburst and a GLOF is critical because of insurance implications. Under the project’s insurance policy, a cloudburst would qualify for a Rs.1,000 crore payout, whereas a GLOF would only be eligible for Rs 500 crores. The Teesta Stage 3 was insured by IFFCO-Tokio General Insurance. The government’s persistence in pushing the cloudburst narrative, despite contrary scientific evidence, suggests a deliberate attempt to manipulate insurance claims for financial gain.

Rushed Reconstruction: Ignoring Due Process and Safety Concerns

Another alarming development is the swift clearance granted to Sikkim Urja Limited for the reconstruction of the Teesta Stage 3 Dam, despite the lack of fresh public hearings and updated environmental impact assessments. The last public hearing was held 19 years ago in 2006, making the approval process outdated and inadequate given recent major environmental changes.

A study published in Science by Sattar et al. (2025) highlights the ongoing instability of the South Lhonak Lake’s northern lateral moraine, making it highly susceptible to future GLOFs. Despite this, the new dam design increases the height from 60 meters to 118.64 meters and raises the spillway capacity from 7,000 cumecs to 19,946 cumecs—substantially increasing the risk of downstream devastation. This increased height would also increase the catchment area, thus making fresh public hearings necessary. The failure to conduct fresh hydrological and environmental studies before greenlighting the project underscores the reckless push for rebuilding.

Neglect of Dam Safety Measures and Disaster Response Failures

The Dam Safety Act 2021 mandates that all states establish a State Committee on Dam Safety and a State Dam Safety Organization (SDSO) to oversee inspections, install monitoring systems, and conduct regular evaluations. The SKM government failed to implement these safety measures, leaving the dam vulnerable.

Additionally, spillway operations during the GLOF were not managed efficiently. The flood reached Teesta Stage 3 at 12:30 AM on 4th October, 2023, now also confirmed by Sattar et al. (2025). However, according to P.S. Golay’s initial statement on 6th October, 2023, he received information about the impending disaster at 10:40 PM on 3rd October, 2023. Despite this, the government machinery was not alerted to open the spillways on time. Taking a U-Turn, the Chief Minister in a press conference on 16th October, 2023 changed his statement stating that he received the information on the incoming GLOF much later, further casting doubt on the government’s handling of the crisis. The mishandling of this crisis led to major devastation, damaging around 25,900 buildings and 31 major bridges downstream. Even today, the infrastructure and roads affected by the GLOF, especially in North Sikkim, remain in deplorable condition, and affected communities are yet to receive proper compensation.

Putting Commercial Interest over Sikkimese Interest

The privatization of Teesta Stage 3 has deprived Sikkim of a key revenue-generating asset under the pretext of debt reduction. The hasty privatization, coupled with manipulated insurance claims, rushed environmental clearances, and disregard for dam safety measures, signals a blatant prioritization of commercial interests over public welfare. A key revenue source for Sikkim has been handed over to private players—not in the state’s best interest, but for political and financial gain.