The Union cabinet has given green lights to a proposal from the ministry of power to provide central financial assistance (CFA) to northeastern state governments, supporting their equity participation in the development of Hydro Electric Projects (HEPs) in the region.

This initiative will be carried out through joint venture (JV) collaborations between state entities and central public sector undertakings (CPSUs). The scheme, which has an allocated budget of Rs 4,136 crore, will be implemented over a period from FY 2024-25 to FY 2031-32, a senior NHPC officer said today.

Advertisement

It aims to bolster hydroelectric capacity in the North Eastern Region (NER) by approximately 15,000 MW. Funding for the scheme will come from a 10 per cent gross budgetary support (GBS) earmarked for the NER within the ministry of power’s total budget.

Under the scheme, the ministry of power will facilitate the formation of JV companies, involving CPSUs and state governments to manage the hydro projects. The CFA will cover up to 24 per cent of the state government’s equity contribution, capped at Rs 750 crore per project. This cap may be adjusted on a case-by-case basis, if necessary.

The equity ratio between the CPSU and the state government in each JV will be maintained at the time of disbursement.

The assistance will be restricted to viable hydroelectric projects. To ensure project feasibility, state governments may need to waive or stagger free power allocations or reimburse state goods and services tax.