Government approves Rs 12,461 crore support for 31,350MW hydro power projects

The Union Cabinet on Wednesday approved an outlay of Rs 12,461 crore to support the development of 31,350 MW hydropower projects to be implemented over the next eight years. The Union Cabinet, chaired by Prime Minister Narendra Modi , has approved the proposal of the Ministry of Power for modification of the scheme of budgetary support for the cost of enabling infrastructure for Hydro Electric Projects (HEP) with a total outlay of Rs 12,461 crore, an official statement said.

According to the statement, the scheme will be implemented from FY2024-25 to FY2031-32. The limit of the budgetary support for the cost of enabling infrastructure has been rationalised to Rs 1 crore per MW for projects up to 200 MW capacity and Rs 200 crore plus Rs 0.75 crore per MW for projects above 200 MW capacity. For exceptional cases the limit of budgetary support may go up to Rs 1.5 crore/MW provided sufficient justification exists.

The scheme has a total outlay of Rs 12,461 crore for cumulative generation capacity of about 31,350 MW to be implemented from FY 2024-25 to FY 2031-32, the statement said.

The scheme will be applicable to all hydropower projects of more than 25 MW capacity, including the private sector projects which have been allotted on a transparent basis. This scheme will also be applicable to all pumped storage projects (PSPs) including captive/merchant PSPs, provided the project has been allotted on a transparent basis.

A cumulative PSP capacity of about 15,000 MW would be supported under the scheme. The projects whose Letter of Award of first major package is issued up to June 30, 2028 would be considered under this scheme.

The statement said that the move would widen the ambit of the budgetary support for cost of enabling infrastructure by including four more items apart from construction of roads and bridges. These four items include the cost incurred for the construction of transmission line from power house to the nearest pooling point including upgradation of pooling substation of state/central transmission utility, ropeways, railway siding, and communication infrastructure.

The strengthening of existing roads/bridges leading to the project will also be eligible for central assistance under this scheme. The budgetary support for cost of enabling infrastructure will be provided after appraisal of the cost of enabling infrastructure by the DIB/PIB and approval of the competent authority as per extant guidelines.

The government has been taking several policy initiatives to address the issues impeding hydropower development, viz., remote locations, hilly areas, lack of infrastructure etc. To promote the hydropower sector and to make it more viable, the Cabinet in March 2019, approved measures, namely declaring large hydropower projects as renewable energy sources, hydropower Purchase Obligations (HPOs), tariff rationalisation measures through escalating tariff, budgetary support for flood moderation in storage HEP (Hydro Electric Projects) and budgetary support for the cost of enabling infrastructure, i.e., construction of roads and bridges.

For the faster development of hydro electric projects and improvement of infrastructure in the remote project locations, the modifications have been made in the earlier scheme. This revised scheme would help in faster development of hydro electric projects, improve infrastructure in the remote and hilly project locations and provide large number of direct employment to the local people along with indirect employment/ entrepreneurial opportunities through transportation, tourism, and small-scale business.

Besides, it would encourage fresh investments into hydropower sector and incentivise timely completion of new projects.