Govt may cancel pending power projects if water cess not paid

Tribune News Service

Pratibha Chauhan

Shimla, January 13

The state government may decide to cancel hydroelectric power projects of 5 MW to 25 MW capacity on which work has not started if they do not agree to pay water cess on electricity generation.

High-level committee to be set up

• The state government has decided to form a high-level committee to review and monitor the setting up of hydroelectric power projects of 5 MW to 25 MW capacity
• The government has allotted 600 projects of 5 MW to 25 MW capacity but work has been undertaken only on 213
• There are around 400 power projects on which work has not started or the progress has been extremely slow
• The government is hoping to generate about Rs 1,000 crore from the cess, which is at present embroiled in litigation

Firms will have to give undertaking

Projects that are under execution but have shown very slow progress or where the work has not been started at all will be asked to give an undertaking that they will pay water cess once they start power generation. Rajesh Dharmani, Technical Education Minister

The government has decided to form a high-level committee to review and monitor the setting up of hydroelectric power projects of 5 MW to 25 MW capacity. “Projects that are under execution but have shown very slow progress or where the work has not been started at all will be asked to give an undertaking that they will pay water cess once they start power generation,” said Technical Education Minister Rajesh Dharmani. The Cabinet had taken the decision at its meeting held here yesterday.

According to data accessed from the Directorate of Energy, 600 such projects have been allotted but work has been undertaken only on 213. There are around 400 power projects on which work has not started or the progress has been extremely slow.

The government is trying to make some independent power producers, who are delaying work on projects allotted to them or the progress has been very slow, to pay the water cess. The government had last year enacted a law to impose water cess on 173 hydroelectric power projects in the state to generate much-needed revenue. Other states that have imposed water cess are Uttarakhand, Sikkim and Jammu and Kashmir.

On August 23 last year, the Himachal Government had agreed to slash the water cess to accommodate power producers. The cess on hydropower generation has been fixed under Section 15(2) of the Himachal Pradesh Water Cess Hydro Power Generation Act, 2023 (Act 7 of 2023).

The government is hoping to generate about Rs 1,000 crore revenue from the cess, which is at present embroiled in litigation. Some independent power producers, including Central public sector undertakings, have challenged the cess in court.

On April 25, 2023, the Union Power Ministry had directed the Chief Managing Directors of the NTPC, NHPC, SJVN, NEEPCO and THDC India Ltd and the Chairman of the Bhakra Beas Management Board (BBMB) to challenge the imposition of water cess in court.

The Central Government had termed the state government’s decision to impose water cess as illegal and unconstitutional and asked the power companies to move court against it. More than 12 power companies have moved court while around 30 power projects have started paying the cess to the state government. The matter is still pending before the High Court of Himachal.

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