Cabinet Sanctions Central Financial Assistance for Hydro Electric Projects in North East

This initiative involves a financial outlay of Rs. 4,136 crore, set to be implemented from FY 2024-25 to FY 2031-32, and aims to support a cumulative hydro capacity of approximately 15,000 MW.

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a substantial Central Financial Assistance (CFA) scheme proposed by the Ministry of Power to support the development of hydroelectric projects in the North Eastern Region (NER). This initiative involves a financial outlay of Rs. 4,136 crore, set to be implemented from FY 2024-25 to FY 2031-32, and aims to support a cumulative hydro capacity of approximately 15,000 MW.

1. Joint Venture Collaboration: The scheme facilitates the formation of Joint Venture (JV) companies between State entities and Central Public Sector Undertakings (CPSUs) for the development of hydroelectric projects. This collaboration is designed to leverage both state and central resources for effective project execution.

2. Equity Support and Caps: Central Financial Assistance will cover up to 24% of the total project equity for state governments, with a maximum cap of Rs. 750 crore per project. This cap can be revisited on a case-by-case basis if required. The equity ratio between CPSUs and state governments in the JV will be maintained when disbursing grants.

3. Focus on Viable Projects: Funding will be limited to viable hydroelectric projects. States are required to waive or stagger free power and/or reimburse State Goods and Services Tax (SGST) to ensure project viability.

Expected Benefits

1. Enhanced Participation and Risk Sharing: The scheme aims to encourage state governments' participation in hydro development, leading to a more equitable sharing of risks and responsibilities. This involvement is expected to mitigate issues related to land acquisition, rehabilitation, resettlement, and local law and order, reducing project delays and cost overruns.

2. Economic and Employment Impact: The scheme will drive significant investment in the NER, creating numerous direct employment opportunities and fostering indirect employment and entrepreneurial activities through transportation, tourism, and small-scale businesses.

3. Contribution to Renewable Energy Goals: Development of hydroelectric projects under this scheme will support India's Nationally Determined Contributions (NDCs) of establishing 500 GW of renewable energy capacity by 2030. It will also aid in integrating renewable energy sources into the national grid, enhancing grid flexibility, security, and reliability.

Previous Policy Initiatives

The Government of India has previously implemented several measures to promote hydro power, including declaring large hydro projects as renewable energy sources, setting Hydro Power Purchase Obligations (HPOs), and providing tariff rationalization measures, budgetary support for flood moderation in storage hydroelectric projects, and infrastructure development support.

This expanded CFA scheme marks a significant step in harnessing the hydropower potential of North East India, advancing the country's renewable energy goals, and fostering regional development through robust infrastructure investments.