Chandigarh: Amid the ongoing tug-of-war over water cess on hydropower projects between Himachal Pradesh on one side, and Haryana and Punjab on the other, a letter from the Union Ministry of Power “disincentivising” states imposing such cess has further intensified the tussle.
The cess was proposed by the Himachal Pradesh government to raise revenues for the hill state. However, it has been criticised by Haryana and Punjab — which are among the states that use the power generated by these projects — over the potential increase in electricity costs for their consumers.
The Union power ministry’s letter, dated 31 March and addressed to states and Union territories, has come to light now. ThePrint has a copy of the letter, which says states imposing such a cess may not get access to power allocation from the central government’s pool of unallocated quota in Central Generating Stations (CGS).
Hailing the Union government’s letter, the Haryana government termed Himachal’s proposal to levy water cess “misplaced”. The Himachal Pradesh government, however, said that it is the “state’s internal matter” and the central government has “no role” in it.
The Himachal Pradesh assembly passed the Himachal Pradesh Water Cess on Hydropower Generation Bill, 2023, on 16 March.
Among the hydropower projects in Himachal are the Bhakra Nangal and Beas projects which supply water and power to Punjab, Haryana, Rajasthan, Delhi and Chandigarh. Uttar Pradesh, Goa, Jammu and Kashmir are other states/UTs that purchase power from Himachal.
Himachal CM Sukhvinder Singh Sukhu met his Haryana counterpart Manohar Lal Khattar Saturday to dispel “misconceptions” regarding the issue. He had earlier met Punjab Chief Minister Bhagwant Mann on 29 March.
Also Read: United against Himachal’s water cess, Punjab & Haryana still slugging it out over Sutlej-Yamuna Link
The letter
In the letter, the Union Ministry of Power said that whenever it will receive a request from a state or a UT for allocation of power from the unallocated quota of CGS, the government will examine certain aspects.
It listed the criteria as “non-creation of regulatory assets, timely payment of subsidy declared, if any, in the consumer tariff by the state government to the distribution utilities, and whether any tax/cess has been imposed by the state concerned, particularly on hydropower or on renewable energy projects which have the potential to obstruct the interstate flow of electricity.”
“Priority will be given for allocation of such power from unallocated quota to such states which adhere to financial discipline and refrain from the imposition of tax/duties on the flow of power to other states,” the letter added.
A senior officer in Haryana CM Manohar Lal Khattar’s office, who requested anonymity, told ThePrint Saturday: “From the contents of the letter, it is very clear that Himachal Pradesh’s proposal to impose water cess is misplaced, and the hill state can’t charge it.”
However, Himachal CM Sukhvinder Singh Sukhu’s media adviser Naresh Chauhan denied having received any letter from the central government and told ThePrint Sunday that “the central government’s role would come only if Himachal Pradesh had proposed water cess on river water moving from one state to the other”.
“We have clarified time and again that we have proposed water cess on hydropower on projects located within our state. This is a state subject and the central government has no business to interfere in this,” he added.
Himachal CM tries to mollify counterparts
On 16 March, while moving the Himachal Pradesh Water Cess on Hydropower Generation Bill, 2023, in the assembly, the state Jal Shakti Department Minister and Deputy CM Mukesh Agnihotri said that the cess will generate Rs 4,000 crore revenue from 172 hydroelectric projects.
A week later, both Haryana and Punjab passed unanimous resolutions against the Himachal government’s proposal in their respective assemblies.
In the Punjab assembly, Water Resources Minister Gurmeet Singh Meet Hayer, who moved the resolution, said the cess will put an additional burden of Rs 1,200 crore on partner states, with the major share to be paid by Punjab.
In the Haryana assembly, the resolution was moved by Khattar. Of this Rs 1,200 crore, Khattar said, his state will have to pay Rs 366 crore. This will make power costlier in the state, he added.
According to a press release issued by the Himachal Pradesh government’s Information and Public Relations Department Saturday, Sukhu met Khattar at Haryana Niwas in Chandigarh and discussed various “bilateral issues”.
Sukhu told his Haryana counterpart that the water cess would not cause any monetary loss to Khattar’s state.
“Sukhvinder Singh Sukhu told Khattar that the water cess is not to be levied on water but on the power generated in 172 hydropower projects. These projects are being operated in Himachal Pradesh and not in Haryana,” the press release said.
Sukhu and Khattar agreed that the senior officers of both states will hold a meeting to discuss the future course of action on various joint projects, including Renuka dam, the Kishau dam, and Adi Badri dam.
Sukhu also invited Haryana to invest in hydropower projects and green hydrogen in the state. He said that investment in Himachal would prove beneficial for both states.
“Apart from this, talks were also held regarding the process of setting up new projects in Himachal Pradesh, on which the Himachal chief minister also agreed. He said that both states will get benefit of electricity and water,” said the release.
However, after the meeting, a senior officer of the Haryana government, requesting anonymity, told ThePrint that Khattar outrightly rejected the suggestions of the Himachal Pradesh CM on the issue of water cess on existing hydropower projects.
“Khattar told Sukhu that Himachal Pradesh cannot levy any cess on old projects. It can do so only if the Haryana government agrees to set up a new project. The CM further told Sukhu that the burden of this cess will fall on the people of Haryana,” the officer said.
On 29 March, Punjab CM Bhagwant Mann, too, had rejected Sukhu’s proposal on water cess, when the two met at the former’s official residence, according to a press release issued by the Punjab Information and Public Relations Department.
Mann informed Sukhu that the water cess was not in the interest of Punjab and hence he could not accept that.
“However, in order to resolve the issue, both the CMs agreed that the chief secretaries and power secretaries of the state will meet after every fortnight to ensure that there is no bickering amongst the states,” the release stated.
(Edited by Anumeha Saxena)