The Union Cabinet, chaired by the Prime Minister Narendra Modi, has today approved the proposal of the Ministry of Power for providing Central Financial Assistance (CFA) to the State Governments of NER towards their equity participation for development of Hydro Electric Projects in the North Eastern Region (NER) through Joint Venture (JV) Collaboration between State entities and Central Public Sector Undertakings.

The Government has informed that this scheme has an outlay of Rs. 4136 crore to be implemented from FY 2024-25 to FY 2031-32 and that a cumulative hydro capacity of about 15000 MW would be supported under the scheme. The scheme would be funded through 10% Gross Budgetary Support (GBS) for North Eastern Region from the total outlay of the Ministry of Power, it said.

The grant towards equity portion of the State Government of NER would be capped at 24% of the total project equity subject to a maximum of Rs.750 crore per project. The cap of Rs.750 crore for each project would be revisited, if required, on a case-to-case basis. The ratio of equity of the CPSU and the State Government in the JV would be maintained at the time of disbursing of the grant.

Central Financial Assistance would be limited to only viable Hydro Electric Projects. States would be required to waive / stagger free power and / or reimburse SGST to make the project viable.

The Government has stated that with the introduction of this scheme, participation of the State Governments in the hydro development will be encouraged and risk and responsibilities will be shared in a more equitable manner. The issues such as land acquisition, rehabilitation and resettlement and local law & order issues would be reduced with State Governments becoming stakeholders, preventing time and cost over-run of the projects.

The Government also said that this scheme shall play a significant role in harnessing the hydro power potential of North East as well as bring huge investment in NER, providing large number of direct employment along with indirect employment / entrepreneurial opportunities through transportation, tourism, small-scale business. Development of hydroelectric projects will also contribute towards realization of India’s Nationally Determined Contribution (INDC) of establishing 500 GW renewable energy capacity by 2030 and help integration of RE sources in the grid thus enhancing flexibility, security and reliability of the national grid, it stated.