The Union Cabinet chaired by the Prime Minister Narendra Modi has decided to provide Central assistance for the development of hydropower projects in the northeastern region (NER).
A government release said that the Union Cabinet has approved the proposal of the Union power ministry for providing Central Financial Assistance (CFA) to state governments of NER towards their equity participation for development of hydropower projects in NER through joint venture collaboration between state entities and Central PSUs.
This scheme has an outlay of Rs.4,136 crore and is to be implemented from FY25 to FY32.
A cumulative hydro capacity of about 15,000 MW would be supported under the scheme. The scheme would be funded through 10 per cent Gross Budgetary Support (GBS) for North Eastern Region from the total outlay of the ministry of power.
The scheme formulated by the ministry of power provides for formation of a JV company for all the projects of a Central PSU with the state government.
Salient features
The grant towards equity portion of the state government of NER would be capped at 24 per cent 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 hydropower projects. States would be required to waive/stagger free power and/or reimburse SGST to make the project viable.
Sharing of risk
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 overrun of the projects, the release said.
Boosting investment & employment
This scheme shall play a significant role in harnessing the hydropower potential of northeastern India. It would bring huge investment in NER 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 release said.
Earlier measures
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 March 9, 2019, approved measures, including declaring large hydropower 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 roads and bridges.
Hydropower potential
According to government statistics, India’s estimated hydropower potential coming from “large” plants (those with installed capacity of more than 25 MW) currently stands at 1,33,410 MW. Of this, NER accounts for 55,930 MW or around 42 per cent. Speaking of NER alone, of the region’s total hydropower potential of 55,930 MW, only 2,027 MW (or 3.6 per cent) has been tapped in the form of currently operational projects. Another 5,000 MW (or 8.9 per cent) is under active construction. This leaves a huge 87.5 per cent of the total hydropower potential yet untapped. Arunachal Pradesh accounts for over 90 per cent of the total hydropower potential in NER.
Also read: Cabinet okays Green Energy Corridor (Phase II) with Rs.12,000-crore outlay
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