Shimla: Despite the central government political message ThePrint has learned that the Sukhwinder Singh Sukhu government has decided to stick to its decision to levy water cess on hydroelectric projects in the state, in the face of opposition from power project companies and states to levy water cess on hydropower projects in their region.
In a statement filed in the Himachal Pradesh High Court on Wednesday, the state government said the Himachal Pradesh Hydroelectricity Generation Bill passed in the assembly in March was completely legal. It also said that the Center had given certain powers to the state to make rules for the management of water and its sources, and the state had used those powers to legislate to levy a water cess, said an official aware of the development. the officer said.
The High Court has listed the matter for August 16.
Another senior official told ThePrint that the state’s response was contrary to the feedback received from stakeholders during a meeting held last week.
The meeting was attended by Public Sector Undertakings (PSUs), large private hydropower facilities and smaller private players. The central government PSUs had reiterated that they would obey the Center on the cess issue, the official said.
In a letter to state chief secretaries on April 25, RP Pradhan, director, Union Ministry of Power, wrote, “Any tax or duty on generation of electricity, which includes all types of generation such as thermal, hydro, wind, solar . , nuclear, etc. is illegal and unconstitutional. ThePrint has a copy of the letter.
The Punjab government’s State Electricity Corporation Limited – which owns the Shanan power project in Himachal – also attended the meeting. However, it followed the Punjab line and opposed the water cess citing violation of laws.
During the reorganization of 1966, the ownership of Shanan Power House was given to Punjab, but it is located in Himachal Pradesh. Government of Himachal Where is It will ‘not renew’ the land lease which expires in March 2024.
On March 16 this year, the Congress government in Himachal led by Chief Minister Sukhwinder Singh Sukhu passed the Himachal Pradesh Water Cess Bill on Hydropower Generation in the Assembly to levy water cess on hydropower projects in the state.
Under the new law, the state government will bear the cost incurred by state power generation companies, while paying cess to other players such as Sutlej Jal Vidyut Nigam Limited (SJVNL), National Thermal Power Corporation (NTPC), and National Hydroelectric Power Corporation (NHPC). Have to do
Following protests from Punjab and Haryana and “discourageous” communication from the Centre, the state cabinet decided to form a panel headed by state power secretary Rajeev Sharma, comprising representatives from the Jal Shakti, law and finance departments.
Punjab and Haryana are opposing this cess as it will also apply to the Bhakra Beas Management Board, which also supplies electricity to these states. Both the states have passed resolutions in their respective assemblies opposing the cess.
Some power project companies, including hydropower giant SJVNL, also challenged the cess in the Himachal Pradesh High Court. During last week’s meeting, these companies are understood to have said that since the matter is sub-judice, the state government should wait for the court’s verdict and hold off on any decision on water cess till then.
However, small hydro project players have consistently opposed the water cess.
Speaking to ThePrint, Rajesh Sharma, president of the Bonafide Himachali Hydro Power Developers Association, asked, “Why are small hydro projects being charged this cess? We are already in financial straits, more such charges will make us unviable.”
According to him, there are 111 operational small HEPs in the state, which generate more than 2600 million units of electricity per annum, of which 339 million units per annum – worth Rs. 223.60 cr – to go to HPSEBL as free power.
Responding to the concerns, Sharma told ThePrint that the government has heard all stakeholders. “The hydropower developers conveyed their objections and suggestions to the panel. Some of them talked about reducing the cess rate,” he said.
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water war
Meanwhile, the state government on Monday issued a notification for the constitution of the Water Cess Commission, which will have a chairman and four members. According to the notification, which ThePrint has seen, the chairperson’s salary has been fixed at Rs 1.35 lakh per month, while the members will get Rs 1.20 lakh per month.
A commission will be set up under the Water Cess Act to levy the cess as well as resolve related issues. Till now Jal Shakti Department is managing it. Reportedly around 125 hydroelectric projects have registered themselves under this act with the department. However, registering under the Act does not mean agreeing to pay water cess.
Central PSUs have told the court that the cess being imposed by Himachal Pradesh is unconstitutional.
In 2019, a parliamentary standing committee on energy in its report on hydropower reportedly stated that the imposition of a water cess “may affect the viability of hydropower projects”. Noting that some states levy a water cess for every cubic meter of water, the report said “there is no justification for levying such a cess as the water goes back into the rivers”.
Under Himachal Pradesh’s hydropower policy, power projects give 12-15 per cent free power to the state as royalty.
A third Himachal government official, on the condition of anonymity, said that the government has enacted the cess law and it is within its legal capacity. According to the official, the cess was introduced to generate revenue and the state will not back down from it.
(Edited by Poulomi Banerjee)
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