Northeast hydroelectric projects to get Central financial assistance for development 

Guwahati: The Union Cabinet on Wednesday (August 28) approved the proposal of the Ministry of Power for providing Central Financial Assistance (CFA) to the state governments of the North Eastern Region (NER) towards their equity participation for development of the hydroelectric projects in the region through joint venture collaboration between state entities and Central Public Sector Undertakings (CPSUs).

This scheme has an outlay of Rs 4,136 crore to be implemented from FY 2024-25 to FY 2031-32. A cumulative hydro capacity of about 15,000 megawatts (MW) would be supported under the scheme, as per a press statement.

The scheme would be funded through 10 per cent Gross Budgetary Support (GBS) for the region from the total outlay of the Ministry of Power. The scheme formulated by the Ministry of Power provides for the formation of a joint venture company for all the projects of a CPSU with the state government, it said.  

The grant towards the equity portion of the state government of the region would be capped at 24 per cent of the total project equity subject to a maximum of Rs750 crore per project, it added.

The cap of Rs750 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 joint venture would be maintained at the time of disbursing of the grant, it said. 

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The CFA would be limited to only viable hydroelectric projects. States would be required to waive or stagger free power and or reimburse State Goods and Services Tax (SGST) to make the project viable, it added.

With the introduction of this scheme, participation of the state governments in hydro development shall be encouraged and risk, and responsibilities shall be shared in a more equitable manner, it said. 

The issues such as land acquisition, rehabilitation and resettlement, and local law and order issues would be reduced with the state governments becoming stakeholders. This would avoid time and cost over-run of the projects, it added.

This scheme shall play a significant role in harnessing the hydro power potential of the Northeast. It would bring huge investment in the region and would provide a large number of direct employments to the local people along with indirect employment and entrepreneurial opportunities through transportation, tourism and small-scale business, it said.

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Development of hydroelectric projects shall also contribute towards realisation of India’s Nationally Determined Contribution (INDC) of establishing 500 gigawatt (GW) renewable energy capacities by 2030 and would help integration of resources in the grid thus enhancing flexibility, security and reliability of the national grid, it added.

The Central government 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 March 7, 2019, approved measures, declaring large hydro power projects as renewable energy sources, Hydro Power Purchase Obligations (HPOs), tariff rationalisation measures through escalating tariff, budgetary support for flood moderation in storage HEP, and budgetary support for the cost of enabling infrastructure - construction of roads and bridges, the statement further said.