HP hydro power may get investment from Punjab

Entrepreneurs in the Punjab region are keen to put up small hydro power projects (SHPs) in Himachal Pradesh, to exploit the huge potential of this sector in the state.

Small hydro power projects under 2 Mw are reserved for bona fide Himachalis. This has restrained many entrepreneurs in the state from making backward and forward linkages in power generation.

Though the past few years have witnessed a spurt in investments coming to the state, there are many industrial houses and entrepreneurs who have made Himachal Pradesh their base and invested substantially in the state. They are looking for opportunities to expand and diversify activities in the state.

It is also natural for these entrepreneurs to explore possibilities of backward integration, through the exploitation of hydro potential.

According to the president of the CII's Himachal Pradesh chapter, Ashok Tandon, "Existing units which have been operating in the state for a minimum period of 15 years,should be recognised as 'native-industrial units,' and considered for preferential allotment of SHP sites in the state, on a par with bona fide Himachalis, co-operatives and NGOs. These native industrial units should be encouraged to set up SHP projects on priority and a preferential basis, for captive use. They should sell additional power generated to the grid at the existing notified rate of Rs 2.50 per unit."

Tandon said this would allow them an opportunity to increase stake in the state, and contribute effectively in the developmental efforts of the state on a sustainable basis.

The policy to allow the wheeling of power generated within the state for captive usage already exists.

Tandon told Business Standard that the CII (Himachal Pradesh) had proposed that specific identified projects be reserved for allotment to such promoters, and setting up of other identified small-hydro power projects be considered for allotment to these units on a preferential basis.

It is pertinent to mention here that at the time of fixing the existing rate of Rs 2.50 per unit, the capital cost for setting up SHP projects was around Rs 4 crore per Mw, as compared with the prevailing capital cost of Rs 6 crore per Mw. Consequently, most projects under 2 Mw were marginally viable at Rs 2.50 per unit.

Tandon said that the corporate sector understood its responsibility, and had proposed to the state government to contribute development funds equivalent to 2-5 per cent (depending upon project size) of the electricity generated at Rs 2.50 per unit to the panchayats of village/ villages, adjacent to the project-site, by the individual power producers (IPPs) under the Bharat Nirman Yojana.

The Panchayats can use these funds for the purposes of provision for drinking water, sanitation, upkeep & maintenance of health facilities and any other community development activities; as may be decided by the Panchayats.