Himachal Pradesh power producers agree to pay 12% royalty amid government takeover warning

Shimla, August 30: Hydro power producers in Himachal Pradesh have agreed to pay 12% royalty to the state government, but Chief Minister Sukhvinder Singh Sukhu has issued a stern warning: if the companies fail to meet additional conditions, the government will not hesitate to take over the projects.

During Question Hour in the Himachal Pradesh Assembly, the Chief Minister replied to a question by MLA Kewal Singh Pathania, in which he criticized the previous government, saying it had sold out the interests of the state. Sukhu pointed out that the previous government failed to secure favourable terms in agreements with power companies, causing Himachal Pradesh considerable financial losses.

Under the new policy of the Congress government, major power projects, including the Dhaulasidh, Sunni and Luhri projects, currently operated by the Satluj Jal Vidyut Nigam Limited (SJVN), will be taken back after 40 years of operation. The same rule will also apply to the Dugar project, which is currently under the National Thermal Power Corporation (NTPC).

Sukhu particularly criticized the previous administration for the handling of the Luhri project, which was inaugurated by Prime Minister Narendra Modi. He said that as per the terms set by the previous government, the state was allowed to get only 4% free power from the project after 10 years, 8% between 11 to 25 years and 12% between 26 to 40 years. According to Sukhu, these terms were highly unfavourable and caused considerable financial losses to the state.

The chief minister also highlighted similar issues with the Dhaulasidh and Sunni projects, where power projects were handed over to companies for 40 years without adequate compensation. Additionally, the previous government waived the Goods and Services Tax (GST) for these projects and did not collect any funds under the Local Area Development Authority (LADA), effectively giving away precious water resources without ensuring adequate returns for the state.

To resolve these issues, the present Congress government has taken up the matter with the central government. Chief Minister Sukhu recently met Union Power Minister Manohar Lal Khattar and informed him of the state’s decision to withdraw three projects of SJVN.

With the power companies now agreeing to pay 12% royalty, the state government has insisted that they have to comply with other conditions as well. If the companies fail to reach an agreement that meets the state’s requirements, the government is ready to take control of the projects to protect the interests of Himachal Pradesh.