Cabinet Modifies Budgetary Support for Enabling Infrastructure for Hydroelectric Project

Nitin Konde, Varun Bhardwaj

Sep 13, 2024 — 2 min read

Cabinet Modifies Budgetary Support for Hydroelectric Project

The proposal of the Ministry of Power to modify the scheme of budgetary assistance for the cost of Enabling Infrastructure for Hydro Electric Projects (HEP) with a total outlay of INR 12461 crore was approved by the Union Cabinet which was led by Prime Minister Narendra Modi. The framework would be put into action between the fiscal years 2024-25 and 2031-32.

Several policy initiatives have been taken by the Government of India in order to overcome the challenges that are preventing the growth of hydropower. These issues include steep terrain, a lack of infrastructure, and other similar issues. In March 2019, the Cabinet approved a number of measures with the purpose of promoting the hydro power sector and making it more viable. These measures include announcing large hydropower projects as Renewable Energy sources, Hydro Power Purchase Obligations (HPOs), tariff rationalisation measures through escalating tariffs, budgetary support for flood moderation in storage HEP, and budgetary support for the cost of enabling infrastructure, which includes the construction of roads and bridges.

To Facilitate the Expedited Construction of Hydroelectric Projects

For the purpose of expediting the development of hydroelectric projects, the government has expanded the scope of the budgetary support for enabling infrastructure to include four additional items beyond the construction of roads and bridges. These include the following: (i) transmission lines from the powerhouse to the nearest pooling point, including the upgrade of the pooling substation of the State / Central Transmission Utility; (ii) ropeways; (iii) railway sidings; and (iv) communication Central funding is also available under this programme to improve preexisting roads and bridges that connect to the project.

Secondly, the Indian government has allocated funds to cover the cost of enabling infrastructure. This will happen when the Director of the Intelligence Bureau (DIB)/PIB has assessed the money and the competent authority has given its approval according to the current regulations.

In addition, the plan is set to roll out from FY 2024-25 to FY 2031-32 with a total expenditure of INR 12,461 crore, which will cover a cumulative generation capacity of approximately 31,350 MW. Hydropower projects with a capacity of more than 25 MW, whether they are publicly or privately funded, will be a part of the plan. As long as the project allocation is open and honest, this plan will work for any type of Pumped Storage Project (PSP), including Captive/Merchant PSPs. Under the plan, up to 15,000 MW of PSP capacity will be supported.

Benefits

Improved infrastructure in remote and hilly project locations, faster development of hydroelectric projects, and a large number of direct jobs for locals would all result from this revised scheme. Indirect jobs and entrepreneurial opportunities would also be generated through transportation, tourism, and small-scale businesses. It would motivate new investments in the hydropower industry and speed up the completion of existing projects.