Amid opposition from Punjab & Haryana, Himachal forms commission to levy water cess on hydel projects

Those drawing water for power generation must now register with 'State Commission for Water Cess on Hydropower Generation'. Some companies have challenged state's water cess bill in HC.

Representational image | ANI

Shimla: The Himachal Pradesh government Tuesday formed the State Commission for Water Cess on Hydropower Generation. The move, which was notified on 24 June, has come amid opposition from the neighbouring states of Punjab and Haryana on imposition of water cess on hydel projects.

Some of the power companies have challenged the state government’s decision on water cess in the state high court.

The commission has been constituted under the provisions of the Himachal Pradesh Water Cess on Hydro Power Generation Bill 2023 passed in the state assembly on 16 March this year. It will levy water cess on hydel projects in the state in future — the Jal Shakti department has taken care of the matter till now.

According to the notification issued by the state Chief Secretary Prabodh Saxena, state Jal Shakti department secretary Amitabh Avasthi will be the chairman of the commission.  Avasthi was instrumental in bringing in the water cess law. The other three members of the commission are H.M. Dhareula, an engineer with electricity board, Congress leader Arun Sharma, and former joint commissioner, law, Shimla Municipal Corporation, Joginder Singh. 

Avasthi will join as chairman after his retirement from the Jal Shakti department on 31 July. The chairman of the commission will get Rs 1.35 lakh per month and the members will get Rs 1.20 lakh every month as salary. The term would be three years or till they attain the age of 65, whichever comes first, according to the notification. 

It added that registration with the commission would be mandatory for users intending to draw water for hydropower generation and they will have to submit a project report to the commission, sanctioned by the “Director of Energy or Central Electricity Authority or any other authority as the case may be”. 

The state has 172 hydel projects and is expected to earn Rs 4,000 crore from water cess. 

The state government passed the water cess Bill to levy water cess on hydroelectric projects within the state boundaries this budget session. Both Punjab and Haryana have passed resolutions in their respective assemblies opposing the proposed water cess.

Days later, central government issued a letter, on 31 March, saying that states imposing such a cess may not get access to power allocation from the pool of unallocated quota in Central Generating Stations.

However, the Himachal government has continued to defend its Bill on the ground that water is a state subject.

Meanwhile, a senior state power department official told ThePrint Tuesday that the government is studying other states, such as Jammu and Kashmir and Uttarakhand, which have imposed water cess. “It seems, the state may lower the water cess rates as it was also suggested by some of the project developers during the meeting with the government panel,” he said.

The cess rates in J&K and Uttarakhand are much lower than that of Himachal Pradesh, the official added.

Hearing on water cess issue 

Some of the private players and central PSUs have challenged the water cess bill in the Himachal Pradesh High Court and the next hearing is on 16 August. 

Earlier, the state government had formed a panel headed by power secretary Rajeev Sharma, with representatives from the Jal Shakti, law and finance departments. In a meeting with the panel, most power project owners opposed the cess, some of them suggested lowering the tariff. The central PSUs said they would follow the central government’s line — which say the cess is illegal.

In 2019, a parliamentary standing committee on energy in its report on hydropower had categorically said that levying water cess “could affect the viability of hydropower projects”. Underlining that certain states levy a water cess for every cubic meter of water, the report stated that there was “no sound rationale” in levying such cess “as there is no consumptive use of water” which goes back into the rivers.

(Edited by Smriti Sinha)