Cabinet approves Rs 4136 crore financial aid for hydro projects in Northeast

New Delhi: The central government, led by Prime Minister Narendra Modi, has greenlit a proposal from the Ministry of Power to provide Central Financial Assistance (CFA) to Northeast states for their participation in developing hydroelectric projects.

This initiative aims to foster collaboration between state governments in the North Eastern Region (NER) and Central Public Sector Undertakings (CPSUs) through joint ventures (JVs).

The scheme, with a substantial outlay of Rs 4136 crore, is set to be implemented from the fiscal year 2024-25 through 2031-32.

It aims to support the development of hydroelectric capacity totaling approximately 15,000 megawatts (MW) in the region.

The funding will be sourced from 10% of the Ministry of Power's Gross Budgetary Support (GBS) allocated specifically for the North Eastern Region.

The plan involves creating Joint Venture companies for each hydroelectric project, with equity shared between a CPSU and the respective state government.

The financial grant from the Centre will cover up to 24% of the state's equity in the project, with a cap of Rs. 750 crore per project.

This cap may be reconsidered on a case-by-case basis if necessary. The equity ratio between the CPSU and the state government will be maintained when disbursing the grant.

However, the Central Financial Assistance will only be available for hydroelectric projects deemed viable.

To ensure project viability, states may be required to waive or stagger free power obligations and/or reimburse the State Goods and Services Tax (SGST).

This initiative is seen as a significant step toward boosting the energy infrastructure in the North Eastern Region, leveraging the region's untapped hydroelectric potential to meet growing energy demands.