Power producers upset over cess imposition

Shimla, March 5

The government’s decision to impose water cess on hydropower projects in the state has not gone down well with power producers. Stung by the decision, the power producers are mulling options ranging from urging the government to reconsider the decision to taking legal recourse.

Govt likely to earn up to Rs 700 crore

• The govt has imposed water cess on hydropower projects
• It ranges from Rs 0.10 per cubic metre to Rs 0.50 per cubic metre depending on the ‘head’ of the project
• The government expects to earn around Rs 500-700 crore annually through water cess on hydro projects

The government has imposed a cess on the use of water in hydropower projects, ranging from Rs 0.10 per cubic metre to Rs 0.50 per cubic metre depending on the ‘head’ of the project. “We are expecting to earn around Rs 500-700 crore annually through water cess on hydro projects,” said a senior government functionary.

Even as the exact financial implication of the move in hydropower projects is yet to be ascertained, the power producers say it will have a detrimental effect on the hydropower sector. “The imposition of cess will put additional burden on the already running projects, and discourage potential investors from investing in the projects,” said Rajesh Sharma, president, Bonafide Hydro Developers Association. “We will present our case before the government. We will demand that the project up to 25 MW be exempted from it,” he said.

Other power producers are considering taking legal recourse. “There’s no provision of cess in terms and conditions of old projects. Also, we are giving 12% royalty and 1% to local area development authority,” said a power producer.