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Union Power Minister opposes water cess in hydel projects in Northeast

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Guwahati, July 10: Union Minister of Power Manohar Lal has asked the state governments of the Northeast not to impose water cess in respect of hydropower projects.

Addressing the Power Ministers’ conference for the North Eastern Region on Tuesday in Guwahati, the minister said it has been advised not to impose such levies as it would ultimately add to the consumers’ tariff. He added that efforts should be made towards providing reliable, quality and affordable power in the State which would also help in attracting industry and, thus, generate employment opportunities.

The issue is important in the Northeast considering the large number of hydel projects being planned.


Water cess is a charge which is levied on the amount of water drawn during the process of hydropower generation. This will apply to hydropower projects operated by government departments, local bodies, as well as companies (referred to as users). The volume of water drawn will be measured based on the difference in the water level at the entry and exit points of the project. The rate of the cess will be notified by the state government.

The issue became important when the Himachal Pradesh government introduced the Himachal Pradesh Water Cess on Hydropower Generation Bill, 2023 was introduced in the Himachal Pradesh Legislative Assembly on March 14, 2023 and passed on March 16, 2023. But in March this year, The Himachal Pradesh High Court declared the water cess levied by the state government on hydropower generation as “unconstitutional” after around 40 power-generating companies challenged the state’s Water Cess Act in the court.

Key topics included the current state of the power sector, hydropower generation, and power transmission and distribution in the region were discussed in the meeting.

The conference reviewed the progress of major government schemes like the North-Eastern Region Power System Improvement Project (NERPSIP), the Comprehensive Scheme for Strengthening Transmission & Distribution Systems in Sikkim, and the Revamped Distribution Sector Scheme (RDSS). Discussions focused on power sector reforms, improving electricity consumers’ ease of living, and ensuring resource adequacy for future demand.

The Additional Secretary (Power) emphasized the government’s commitment to providing reliable and quality power, noting ongoing hydropower projects totalling 15 GW and plans to add another 50 GW. The importance of developing Pumped Storage Projects (PSP) was also highlighted.

Under the RDSS, distribution infrastructure and smart metering projects worth Rs 13,147 Crores have been sanctioned for NER states, with a call to expedite progress. The financial health of DISCOMs was noted as crucial for sector transformation.


The minister stressed on the collective efforts needed to achieve “Viksit Bharat” by 2047 and the significant hydropower potential of the NER states. He further mentioned that the North-Eastern States have the richest Hydro Power potential in the country which needs to be harnessed to achieve the ambitious national target of 500GW of Renewable Energy by 2030. The Central Government’s initiatives to support hydropower projects, such as Hydro Purchase Obligation (HPO) and tariff rationalization, were mentioned. States were encouraged to overcome land acquisition and forest clearance challenges.

The Minister urged states to enhance their capacities for transmission project execution with Powergrid’s support and to establish training centres for linemen in Nagaland and Tripura.

States with high Aggregate Technical and Commercial (AT&C) losses were urged to prioritize smart metering to improve billing and collection efficiencies. The Union Minister assured cooperation to address the issues raised by the state ministers for the region’s power sector development.

Read: Police preliminary report links East Jaintia Hills’ brutal murders to drug use & peddling


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