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Cabinet Approves INR 4,136 Crore For Hydropower Projects in Northeast

The Cabinet’s approval for a CFA scheme aims to develop 15,000 MW of hydropower in North Eastern Region (NER), enhancing grid integration, flexibility, security, and reliability, while boosting local investment and employment.

August 29, 2024. By EI News Network

The Union Cabinet has approved the Ministry of Power's proposal to provide Central Financial Assistance (CFA) to North Eastern Region (NER) State governments. This funding will support their equity participation in developing hydroelectric projects through joint ventures between State governments and Central Public Sector Undertakings (CPSUs).

The scheme has been allocated an outlay of INR 4,136 crore, to be implemented over the period from fiscal year 2024-25 to fiscal year 2031-32. It aims to support a cumulative hydro capacity of approximately 15,000 MW, marking a substantial investment in renewable energy infrastructure for the region. This funding will be supplemented by 10 percent Gross Budgetary Support (GBS) for NER from the Ministry of Power’s total outlay.

Under the new scheme, a joint venture (JV) model will be established for each project, involving both a Central PSU and the respective State government. The grant towards the State government’s equity is capped at 24 percent of the total project equity, with a maximum limit of INR 750 crore per project. This cap is subject to review on a case-by-case basis, ensuring flexibility and responsiveness to project-specific needs.

Central Financial Assistance will be restricted to projects deemed viable, requiring states to either waive or stagger free power and/or reimburse State Goods and Services Tax (SGST) to enhance project feasibility. This stipulation is aimed at ensuring that only financially sound projects receive support, fostering more effective and sustainable development.

The introduction of this scheme is expected to significantly increase the involvement of State governments in hydro power projects, promoting a more equitable distribution of risks and responsibilities. By addressing challenges related to land acquisition, rehabilitation, and local law and order, the scheme is anticipated to reduce project delays and cost overruns.

The scheme is expected to bring substantial investment to the NER, creating a plethora of direct and indirect employment opportunities. This includes jobs in sectors such as transportation, tourism, and small-scale businesses, contributing to the region’s economic growth.

Furthermore, the development of hydroelectric projects under this scheme is expected to contribute to India’s Nationally Determined Contribution (NDC) of achieving 500 GW of renewable energy capacity by 2030. It is anticipated that this will improve the integration of resources into the national grid, enhancing its flexibility, security, and reliability.

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