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Debt-hit Himachal’s latest bid for revenue — demanding 40% stake in major hydel projects

Move comes close on the heels of a controversial bill passed by the Sukhvinder Singh Sukhu govt levying a water cess on 172 hydropower projects in the state. 

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Shimla: The Himachal Pradesh government led by Chief Minister Sukhvinder Singh Sukhu has asked for a 40 per cent stake in all major hydropower projects in the “electricity-surplus” state, ThePrint has learnt — a development that comes after a water cess imposed by the state snowballed into a major political row. 

A senior official in the state’s power department told ThePrint that the Sukhu government had first taken up the issue in February, before raising it once again with Union Power Secretary Alok Kumar when the latter visited the state on 15 April. 

The official said that the Sukhu government had asked for Himachal’s share to be increased in major hydropower projects overseen by Bhakra Beas Management Board (BBMB) and the SJVN. The demand concerns projects that have repaid loans and recouped costs, ThePrint has learnt.

While the BBMB is a board that comes under the Punjab government and oversees the Bhakra Nangal and Beas projects, the SJVN, first incorporated as Nathpa Jhakri Power Corporation (NJPC), is a joint venture between the Union Ministry of Power and the Himachal government.   

The state currently gets a royalty of 12 per cent from private hydel power companies and has a share of 7.19 per cent in BBMB’s projects. In addition, it also has a total of 26.8 per cent equity in SJVN, official records show.  

According to the official, the state government is also asking for a review of power projects with central public sector companies such as SJVN, especially in cases that have no stipulations on how long these firms will continue to control the project. 

State’s power secretary Rajeev Sharma confirmed to ThePrint that the state government had indeed been pushing for a greater share in power projects.

“The chief minister was clear on this issue. He wanted Himachal to have an enhanced share. We have taken up the matter with the central government and the CM is continuously monitoring the developments,” he said, adding that the Sukhu government was currently working on a memorandum to send to the Modi government. 

ThePrint reached the Union Power Ministry by email. This report will be updated when a response is received.

Meanwhile, responding to the move, an official from SJVN who didn’t want to be named told ThePrint that the company will “cross the bridge when it comes”. “Nothing’s official so far. The state government has (only) written to the central government,” the official said. 

The development comes as the state debates ways to generate revenue. In March, the then four-month-old Congress government had pushed through a bill in the state’s assembly levying a water cess on 172 hydropower projects in the state. 

Both Punjab and Haryana objected to the cess, arguing that it would incur a burden of Rs 1,200 crore on them.

But Sukhu had defended the move, saying that the state government was well within its rights to do so. 

Also Read: Himachal’s truck cartels are destroying its economy. Adani to Cremica, all want out

What Himachal wants

Himachal has 172 hydropower projects with a total potential of 24,500 MW, of which 11,149 MW is being harnessed, according to data from the government.

On 30 September 2009, the state government issued a notification directing all power projects in the state to contribute 1 per cent of its profit towards Local Area Development Funds (LADF). 

Administered by the district administration, LADF is used for developmental activities of the area where a project is located.

MLA-LAD are constituency funds provided by India’s states to their legislators, and are meant to be used for developmental activities within their constituency. 

Officials, however, told ThePrint only 108 of the state’s 172 projects were making this contribution while the rest have claimed exemption saying they were commissioned before the notification was issued.

Hydropower projects have always been a sore point for Himachal — in April 2018, after almost a decade of fighting for it, the state secured a 7.19 per cent share in the BBMB, according to media reports. It had asked for a similar share from states like Haryana and Rajasthan as well.

In March 2022, then chief minister Jairam Thakur once again demanded that Himachal should be made a partner in the BBMB projects at a meeting chaired by Home Minister Amit Shah, according to media reports. However, Punjab opposed the move and it has since been put on the backburner.

The state currently generates a revenue of Rs 1,000 crore from the royalty from hydropower projects, according to official estimates.

On 16 April, Sukhu called the state’s demand to get its share in the projects increased “justifiable”. 

“Water resources are ours, land is ours, our people are displaced (by these projects) and when the companies have paid all the liabilities and are earning a huge profit, this is legitimate for Himachal Pradesh to ask for an enhanced share,” he had said at a press conference. 

Among its demands is the renegotiation of MoUs that have no clause stipulating when a project by a central public sector undertaking will be handed over to the state government. 

In the case of some projects run by the SJVN, this stipulation is 70 years, the government’s records show.  

“There are some projects where there’s no agreement on the time period. It means the CPSU will own the project indefinitely forever and reap the profit alone and the state would only get 13 per cent as royalty and local area development fund,” the senior official from the state’s power department quoted above told ThePrint.

At his press conference, Sukhu said that he had asked for ownership to be transferred after 75 years. This, he said, was because MoUs signed for projects after 2019 have a stipulation of 70 years.

Another issue that has been raised pertains to some projects undertaken by the SJVN. Among these are the 210-MW Luhri stage-1,172-MW Luhri State-2, 382-MW Sunni Dam Hydro Electric Project, and 66-MW Dhaulasidh Hydro Electric Project. 

“MoUs signed between the state government and SJVN on these projects have some issues,” the official said. “The power share offered to Himachal Pradesh is on staggered basis — something that’s not acceptable to the chief minister.” 

Political issue

Himachal hopes that the state’s hydropower projects and excess power generation would help patch up its crumbling finances. 

In February — two months after he was voted to power — Sukhu claimed that the state had financial liabilities of over Rs 91,000 core. 

In March, the Himachal assembly debated various means to generate revenue through hydropower projects — including imposing a water cess. 

According to the Vidhan Sabha’s proceedings, Sukhu had told the House at that time that increasing the state’s share in such projects to even 30 per cent would help generate Rs 10,000 crore.  

But there could be challenges to this plan — with the Shanan Power Project being one of the biggest sticking points. 

The 10-MW British-era project in Jogindernagar was given to the Punjab government when the states of Himachal and Haryana were carved out of Punjab in 1966. 

The land lease for the project was for 99 years and runs out in 2024, a state government official told ThePrint, adding that the state is keen to get back the project but Punjab has yet to respond to its queries.

The senior power department official quoted above added that the state government had already written twice to the Modi dispensation — the last time in April to initiate the transfer of the Shanan hydropower project to Himachal but has received no response yet.

The state’s demands could spark a political row with Punjab, a former civil servant from Himachal who didn’t want to be named told ThePrint. “All these are political issues. Chandigarh or Haryana would not accept it and Himachal will have to continue to struggle for its share in BBMB despite the Supreme Court order.” 

He was referring to the top court’s 2011 order, in which it upheld Himachal’s claim of 7.19 per cent share in BBMB power projects located in the state’s territory.

But Rajesh Dharmani, a Congress MLA, called it Himachal’s “dues” for all the sacrifices it has made for hydropower projects.

“Himachal never got its dues. The state got the 7.19 share in BBMB and that too almost 10 years ago. Arrears are still pending. The Bhakra dam is built within the boundaries of Himachal Pradesh, but we get almost nothing,” he told ThePrint. 

A previous version of this report said the Himachal govt’s notification directed power projects to contribute 1 per cent of its profit towards MLA LAD. The error is regretted.

(Edited by Uttara Ramaswamy)

Also Read: ‘Cost-cutting’ vs ‘insult’ — in Himachal, Congress-BJP spar over scrapped pension to Emergency prisoners


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