NEW DELHI: The government on Wednesday approved a proposal of the Ministry of Power to provide Central Financial Assistance (CFA) to the North Eastern Region (NER) state governments with an outlay of Rs. 4,136 crore for their equity participation in developing hydroelectric projects.
A decision in this regard was taken here at a meeting of the Union Cabinet, chaired by Prime Minister Narendra Modi, Information & Broadcasting Minister Ashwini Vaishnav said, while adding that the projects under the scheme will be executed through Joint Venture (JV) collaborations between state entities and Central Public Sector Undertakings (CPSUs).
The Minister, while briefing media after the meeting of the Union Cabinet, said that the scheme will be implemented during a period from financial year 2024-25 and 2031-32 and it aims to support a cumulative hydro capacity of approximately 15,000 MW.
“It will be funded through 10 per cent Gross Budgetary Support (GBS) for the North Eastern Region, drawn from the Ministry of Power’s total budget. The Ministry’s plan includes forming a JV company for each project between a central PSU and the respective state government,” the Minister said.
Later in a statement the government said, “The grant towards equity portion of the State Government of NER would be capped at 24 percent 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.”
The approved scheme aims to encourage state governments’ participation in hydro development, allowing for a more equitable sharing of risks and responsibilities.
“By involving state governments as stakeholders, issues related to land acquisition, rehabilitation, resettlement, and local law and order are expected to be minimised, thereby reducing the chances of project delays and cost overruns,” it said.
The scheme is expected to play a crucial role in harnessing the hydropower potential of the North East, attracting significant investment to the region, and generating substantial direct and indirect employment opportunities, including in sectors like transportation, tourism, and small-scale businesses.
It is to be noted here that on March 7, 2019, the Union Cabinet had approved measures to promote the hydropower sector, such as classifying large hydro projects as renewable energy sources, introducing Hydro Power Purchase Obligations (HPOs), rationalising tariffs through escalation, and providing budgetary support for flood moderation and the construction of enabling infrastructure like roads and bridges.