Union Cabinet Approves Rs 4136 Cr Central Assistance for 15000 MW Hydro Electric Power Plants in NE

The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved the proposal of the Ministry of Power for providing Central Financial Assistance (CFA) to the State Governments of northeast towards their equity participation for development of Hydro Electric Projects in region through Joint Venture (JV) Collaboration between State entities and Central Public Sector Undertakings.

This scheme has an outlay of Rs. 4136 crore to be implemented from April 2024 to March 31 2032. A cumulative hydro capacity of about 15000 MW would be supported under the scheme. The scheme would be funded through 10% Gross Budgetary Support (GBS) for the North Eastern Region from the total outlay of the Ministry of Power, an official statement issued after the Cabinet meeting said.

The Scheme formulated by the Ministry of Power provides for formation of a Joint Venture (JV) Company for all the projects of a Central PSU with the State Govt.

The grant towards equity portion of the State Government would be capped at 24% of the total project equity subject to a maximum of Rs.750 crore per project. The cap of Rs.750 crore for each project would be revisited, if required, on a case-to-case basis. The ratio of equity of the CPSU and the State Government in the JV would be maintained at the time of disbursing of the grant.

Central Financial Assistance would be limited to only viable Hydro Electric Projects. States would be required to waive / stagger free power and / or reimburse SGST to make the project viable.

“With the introduction of this scheme, participation of the State Governments in the hydro development shall be encouraged and risk and responsibilities shall be shared in a more equitable manner. The issues such as land acquisition, rehabilitation & resettlement and local law & order issues would be reduced with State Governments becoming stakeholders. This would avoid time and cost over-run of the projects,” the statement said.

This scheme shall play a significant role in harnessing the hydro power potential of North East. It would bring huge investment in the North Eastern Region and would provide large number of direct employment to the local people along with indirect employment / entrepreneurial opportunities through transportation, tourism, small-scale business. Development of hydroelectric projects shall also contribute towards realization of India’s Nationally Determined Contribution (INDC) of establishing 500 GW renewable energy capacity by 2030 and would help integration of RE sources in the grid thus enhancing flexibility, security and reliability of the national grid.

The Government of India has been taking several policy initiatives to address the issues impeding Hydro Power development. To promote the hydro power sector and to make it more viable, the Cabinet, on 7th March, 2019, approved measures like declaring large hydro power projects as Renewable Energy sources, Hydro Power Purchase Obligations (HPOs), tariff rationalization measures through escalating tariff, budgetary support for flood moderation in storage HEP and budgetary support for the cost of enabling infrastructure, like construction of roads and bridges.