New Delhi: The Centre is persuading state governments to forego their share of free power from hydroelectric plants to make the projects viable and put the hydropower sector on track. It proposes to hold a formal interaction on the issue with state governments at the ensuing review meeting in between Union power minister RK Singh and power ministers of states. India is targeting production of 75,000 MW of hydropower by 2030, up from 45,000 MW at present, to balance the electricity grid as the country aims to add 175 GW of capacity. A senior government official said the states are being held asked to forego or defer their free power shares only to the extent required to make the tariffs affordable. “We are trying to convey to the state governments that the projects can be economically viable when the free power requirement is waived or deferred to later years,” said the government official, who did not wish to be identified. “It is otherwise very difficult to bring down the tariffs of the projects… we don’t want our PSUs (public sector units) to be saddled with bad assets.” The power ministry has been emphasising on taking up only hydropower projects which are commercially viable, said the official. The ministry has been urging state governments to play their part in making hydropower competitive by foregoing, deferring or staggering free power and, if need be, their share of goods and services tax (GST), he said. Himachal Pradesh recently exempted 10 projects from supplying free power in the initial years. It also waived its share of state GST for the projects. On September 25, the Himachal Pradesh government signed agreements with state-run NTPC, NHPC and SJVN for setting up 10 hydropower projects of 2,917 MW on entailing an investment of about Rs 28,000 crore. The main relaxation in the agreements signed by Himachal Pradesh government is that 12% free power benefits will be staggered or deferred on project-to-project basis in a manner that no or minimum burden is felt in the initial years of loan repayment period, during which tariff is generally high. Further, 50% of state GST would be reimbursed to the developers, the official said. The Jammu & Kashmir government also exempted NHPC’s 624 MW Kiru project from toll tax, state GST, free power in a decremental manner and water usage charges for 10 years. Long gestation period, geological surprises, local agitation, lack of clearances and inadequate infrastructure are some of the factors that have led to delays in implementing hydropower plants, rising project costs and tariffs. The government had approved measures in March to promote hydroelectric projects, including treating them as renewable projects and increasing debt repayment period to 18 years from 12 years to reduce tariffs in initial years. On Friday, NHPC signed a definitive agreement for the implementation of resolution plan for takeover of the 500 MW Lanco Teesta Hydro Power Ltd. The project, first stressed power plant to be acquired by a PSU, will be implemented at an estimated project cost of Rs 5,748.04 crore, including a bid amount of Rs 897.50 crore for acquisition.
India is seeking to install 75 GW of hydropower capacity by 2030 as part of wider ambitions to add 175 GW of renewable power. To reach this goal, the central government is asking state governments to give up their share of free hydroelectric power and potentially their share of goods and services tax (GST) too, in order to make the projects economically viable and to support the hydropower sector. In September, the Himachal Pradesh government agreed free power and GST exemptions for 10 hydropower projects on Chenab river, with a capacity of 2.9 GW.