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Hydro projects of 5,950 MW capacity stalled, policy for revival on the cards

The government might be prompted to bring in a hydro policy at the earliest.

PTI | New Delhi |

As many as 16 hydro power projects of 5,950 MW capacity are stalled due to financial constraints and other reasons, which may prompt the government to bring in a hydro policy at the earliest.

“A total of 37 hydro power projects of 12GW generation capacities are under construction in the country. Out of these, 16 projects with total generation capacity of 5,950 MW are either stalled or held up due to financial constraints and other reasons,” a senior official said.

The official said out of the 16 projects, 10 are stalled due to financial stress.

According to the Central Electricity Authority estimates, the annual loss of energy generation from these stalled hydro projects is about 18,761 Million Units.

The official said the government is working on a hydro policy that would provide for longer loan repayment period, lower interest rate and other incentives which would help bring down the tariff of these projects.

The power ministry has informed about formulating a hydro policy to Parliamentary Standing Committee on Energy.

“A typical hydro station is financed based on the debt/equity ratio of 70:30. The loan component (70 per cent) forms the major portion of the total investments and if long term, low interest financing options are made available, it would enhance the viability of the project,” the ministry said in its submission to the committee.

The policy will also shore up the hydro power sector, which is facing stiff competition from other clean sources and also from the coal-based thermal power.

It would also remove the distinction between small projects of up to 25 MW capacity and large projects above 25 MW, the official said.

Presently, small hydro projects are treated as renewables and get many benefits including economical borrowing cost and other incentives. But large hydro power projects (above 25 MW) are not entitled for such benefits.

The proposed policy will declare all hydro projects as renewable irrespective of their size and capacity. The proposal is under advanced stage of inter-ministerial consultations, the ministry informed the committee.

The panel in its recent report has also suggested that long-term finances at cheaper rate should be provided to all hydro projects and the government should also make efforts to get grants/assistance/loan at cheaper rates from international agencies.