The initiative of the Himachal government to levy water cess on hydropower projects to mobilise resources has hit a roadblock with the Union government asking the states to withdraw the water cess terming it as illegal. Asserting that the stand of the central government on the issue was totally unjustified, the deputy CM said that the constitutional validity of the Himachal Pradesh Water Cess on Hydropower Generation Act 2023, passed by the state Assembly on March 16, 2023, to impose water cess would be decided by the court, and not by the Union government.
The name of the Water Cess Commission would be changed to Water Commission which would deal with all the water-related state and interstate issues in the future, said Agnihotri, who also holds the portfolio of the Jal Shakti Department. The water cess on power generation has been imposed on 172 hydropower projects in the state on the basis of assessment of the water drawn for hydropower generation by installing flow-measuring devices to compute the cess amount.
There are 23 dam projects with a total capacity of 9,203 MW power in Himachal Pradesh run by the National Hydro Power Corporation (NHPC), National Thermal Power Corporation (NTPC), Bhakra Beas Management Board (BBMB), Satluj Jal Vidyut Nigam Limited (SJVNL) and Independent Power Producers (IPP), while six more projects with a capacity of 1,916 MW are under construction. Agnihotri said the letter written by the Union government is aimed at creating confusion among power producers, and the Centre has asked the public sector hydropower companies not to pay the cess and challenged the Act in court. The government has been very considerate and has substantially reduced the water cess charges on the plea of hydropower producers and against initial estimates of Rs 4,000 crore revenue, now the government would annually earn Rs 1,842 crore, he added.