Revamped Policy Sets New Standards for Long-term Hydropower Projects

In a groundbreaking move aimed at propelling sustainable development in the energy sector, the Himachal Pradesh Cabinet, chaired by Chief Minister Sukhvinder Singh Sukhu, has introduced a paradigm shift through the revision of the Swaran Jayanti Energy Policy. The amended policy not only extends the Memorandum of Understanding (MoU) tenure for hydropower projects but also introduces a dynamic royalty structure, fostering a new era of responsible energy development.

Under the revised Swaran Jayanti Energy Policy, MoU durations for hydropower projects have been extended to 40 years. One of the most transformative features of the policy amendment is the innovative royalty structure. Over the course of the 40-year partnership, the royalty rates will undergo a carefully calibrated evolution, reflecting a balanced distribution of benefits for both investors and the state. The initial 12 years will see a royalty rate of 15 percent, providing investors with a favourable foundation for their projects. Following this initial phase, the royalty rate will escalate to 20 percent for the subsequent 18 years, mirroring the maturation of the projects. In the final 10-year phase, the royalty rate will peak at 30 percent.

Significantly, the policy amendment stipulates that once the 40-year period concludes, the ownership of the hydropower project will be seamlessly transferred back to the State Government, free from any financial encumbrances or liabilities.

An integral aspect of this policy is the assurance that even during an extended operational period, the royalty payable to the state will never fall below 50 percent.

In a significant step towards enhancing environmental consciousness, the cabinet decision includes the revocation of the relaxation of staggered free power royalty that was previously granted to SJVNL and NHPC for various hydropower projects.

Furthermore, the cabinet’s discussions encompassed a revision of the tariff structure for water cess applicable to hydropower projects. This recalibration ensures that the water resources utilized by these projects are subject to a fair and sustainable fee structure, perfectly aligned with Himachal Pradesh’s resource management objectives.

Chief Minister Thakur Sukhvinder Singh Sukhu expressed his optimism about the policy’s potential impact, stating, “Our vision is to intertwine economic development with environmental sustainability. The revamped Swaran Jayanti Energy Policy is a testament to our commitment to responsible growth while ensuring that the state’s resources are utilized optimally for the benefit of our people.”