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Micro hydro projects in limbo for lack of funds

Environment-friendly micro hydropower projects were losing steam across the country with the Centre's failure to revive financial assistance for two years to both government and private sector for setting up facilities.
Micro hydro projects in limbo for lack of funds

Investors in Himachal Pradesh said that most of the projects have been hanging in limbo since April 1, 2017, when the capital subsidy of Rs 1.25 crore for a project up to 100 kw was abruptly halted.

The construction cost of a project of 100 kw capacity varies from Rs 1.5 crore to Rs 2.25 crore.

"A total of 55 mini hydropower projects in Himachal Pradesh were almost at a standstill owing to the lack of funds after the scrapping of the Central assistance scheme," independent power producer Amit Walia, who has been allocated a hydro project in the hills of Dharamsala, told .

He said there was no clear-cut timeframe, either of the state or the Central government, on the revival of the subsidy despite declaring all hydro projects as renewable energy.

As per the Centre's policy, the micro projects were meant to fulfill power requirements of remote areas in a decentralised manner.

In a communication to Walia on July 30 this year, the Ministry of New and Renewable Energy said the last (financial assistance) scheme had ended in 2017.

Now the Ministry will bring in a new scheme very soon, which is under the active consideration of the government, wrote Under Secretary (Small Hydro Power Division) B.S. Negi.

Interestingly, the government scrapped the scheme in 2017 which was declared as the year for hydropower.

Even the Ministry in a communication to Himurja, the state's nodal agency for renewable energy programmes, on July 25, 2018 claimed that it was in the process of revising the small hydropower scheme.

It had asked Himurja not to forward any new proposal for capital subsidy till the new policy was announced.

The Ministry, which claimed that the financial assistance scheme was ended in April 2017, in an official communication to Himurja on May 25, 2017, sought documents like detailed project report and statutory clearance of 55 projects for extending the financial support.

"On the one hand the Ministry is claiming that the financial assistance scheme came to end on April 1, 2017, and on the other it was seeking documents on May 25 for scrutinizing the proposals for financial assistance. This is something surprising," Walia said.

According to him, the Union ministry seemed no longer looking at formulating a new scheme for reviving hydropower projects in the country.

In a reply in the Lok Sabha on July 18, Union Minister R.K. Singh said the clearance of the Ministry was not required for setting up of small, mini or micro hydropower projects.

It only provides incentives in the form of central financial assistance to the eligible project developers as per prevailing scheme guidelines.

He said 64 proposals were received by the Ministry for availing subsidy in the last three years. These included 16 from Himachal, seven from Uttarakhand and nine from Gujarat.

In a reply to another question in the Lok Sabha, the Minister said the aggregate capacity of small hydro projects commissioned by June 30 in the country was 4,604.81 MW.

A total of 116 small projects aggregating to 589.99 MW capacity were under construction in the country and 1,118 were commissioned.

A financial assistance of Rs 46,482 lakh was extended between 2016 and 2019 to projects located across the country.

"We have invested heavily to complete initial formalities relating to the project. The government's plan to financially assist the upcoming projects is lying in a limbo for over two years now. We don't know whether the new scheme would have a provision of central financial assistance or not," asked another state developer Chander Shekhar.

Added Avnish Mahajan: "The construction and machinery costs have escalated and till our projects are approved for the central financial assistance the project costs would be abnormally high or even not finically viable."

The Union Finance Ministry has asked the Ministry of New and Renewable Energy to rework the new hydro policy and reduce dependence on budgetary support, a senior official with the latter told , requesting anonymity.

The Ministry of New and Renewable Energy website still invites applications for the financial assistance for micro hydel projects.

A recent parliamentary committee report cited the sluggish growth in the hydropower sector to "lack of coordination among the ministries, state governments and agencies related with the development of hydro power".

Hydropower during the previous United Progressive Alliance (UPA) regime got a big boost.

In Himachal Pradesh, out of the total assessed hydel potential of 27,436 MW, a total of 10,547 MW has been harnessed till December 2018, which is 38.44 per cent of the total potential.

Currently, 204 mega hydroelectric power generating stations (above 25 MW capacity) having an aggregate installed capacity of 45,399.22 MW are in operation across the country.

Thirty-six projects (above 25 MW capacity) with an aggregate installed capacity of 12,034.5 MW are presently under construction in the country and the fund spent so far on these projects is Rs 60,042 crore, says a reply in the Lok Sabha.

(Vishal Gulati can be reached at vishal.g@.in)

( With inputs from IANS )

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