"Government to Offer Financial Assistance for Hydro Power Development in North Eastern States"

The Cabinet approved the Power Ministry’s proposal recently to provide Central financial assistance for hydroelectric projects in North Eastern States. This initiative involves equity participation through joint ventures between State entities and Central public sector undertakings (CPSUs).

The scheme, with an outlay of ₹4,136 crore, is set to be implemented from FY25 to FY32. It aims to support a cumulative hydro capacity of approximately 15,000 MW. The funding will be allocated from the 10 percent Gross Budgetary Support (GBS) designated for the North Eastern Region (NER) by the Ministry of Power, according to an official statement.

Under this scheme, a joint venture company will be formed for each CPSU project in collaboration with the State government. Financial assistance for the equity portion of NER’s State governments will be capped at 24 percent of the total project equity, with a maximum limit of ₹750 crore per project. This cap may be revisited on a case-by-case basis if needed. The equity ratio between the CPSU and the State government in the joint venture will be maintained when disbursing the grant.

The Central financial assistance will be limited to viable hydroelectric projects. States will be required to either waive or stagger free power and/or reimburse State Goods and Services Tax (SGST) to ensure project viability.

The scheme aims to encourage greater participation from State governments in hydro power development, equitably sharing risks and responsibilities. It is expected to address challenges such as land acquisition, rehabilitation and resettlement, and local law and order issues, thereby minimizing project delays and cost overruns.

HBL