Sukhu Govt in a ‘Bind’ as power giants NHPC, SJVN propose return of HPPs, demand ₹3,397 Cr refund

Shimla, March 21,

In a move that can be termed a setback for the financially strained Himachal Pradesh government, Central power companies NHPC and SJVN Limited have proposed/decided to return the hydroelectric projects allocated to them during the tenure of the previous Jai Ram government. However, they have demanded a refund of Rs 3,397 crore already spent on these projects before the state can reclaim them.

The issue came to light after Union Power Secretary wrote a letter to Himachal Pradesh Chief Secretary Prabodh Saxena, highlighting the financial implications of the companies’ withdrawal. The content of the letter, confirmed by highly placed sources, has triggered concerns within the state administration, as likely the government lacks the resources to repay such a massive sum. The matter is also pending in the Himachal Pradesh High Court, with the next hearing scheduled for April.

During the BJP-led Jai Ram Thakur government, multiple power projects were allocated to SJVNL and NHPC under different models. SJVNL was awarded the 210 MW Luhri Stage-1, 66 MW Dhaulasidh, and 382 MW Sunni Dam projects on a BOOM (Build, Own, Operate, and Maintain) basis, while NHPC received the 500 MW Duggar Project on a BOOT (Build, Own, Operate, and Transfer) basis for 70 years. Under the allocation terms, these companies were required to pay only 4% royalty to the state for the first decade after commissioning, gradually increasing to 25% after 40 years. Critics argue that this arrangement heavily favoured the companies over the state.

Here it is pertinent to mention that at the time of this agreement, current Chief Secretary Prabodh Saxena was serving as the Power Secretary under the Jai Ram government.

After taking office, the Sukhvinder Singh Sukhu-led government issued a notification on September 30, 2024, revising the royalty structure. Under the new terms, companies would have to pay 12% royalty for the first 12 years, 18% from years 13 to 30, 30% from years 31 to 40, and 40% beyond 40 years. These changes aimed to boost the state’s revenue from hydro projects, aligning with the terms that existed before 2020. However, NHPC and SJVNL refused to accept the revised conditions, arguing that the projects were allocated based on the original agreement.

According to the details available Secretary Ministry of power Government of India has written to Chief Secretary Himachal Pradesh, that if existing terms of MOU are not honoured by GoHP, then they may take over by paying the expenditure incurred on these projects along with interest.

As per information the Luhri Stage-1 project has seen an expenditure of Rs 1,655 crore, with over 50% of the work completed. The Dhaulasidh project has incurred Rs 768 crore in costs, with 62% of the work done. The Sunni Dam project has seen an investment of Rs 867 crore but remains only 27% complete. Meanwhile, Rs 107 crore has been spent on the Duggar project, which is still awaiting clearances.

With a demand for a Rs 3,397 crore refund, the Sukhu government faces a serious financial challenge. Experts noted that now the the key concerns before the state will be to firstly to arrange the funds to take over these projects, and secondly to evaluate whether it has the expertise and infrastructure to operate them, whether private firms will be willing to take over under the revised conditions, and whether the central government will create hurdles in the transition process.

So now as the legal battle moves forwards, all eyes are on the state government’s next move.

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Himachalscape bureau

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The HimachalScape Bureau comprises seasoned journalists from Himachal Pradesh with over 25 years of experience in leading media conglomerates such as The Times of India and United News of India. Known for their in-depth regional insights, the team brings credible, research-driven, and balanced reportage on Himachal’s socio-political and developmental landscape.

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Himachalscape bureau

The HimachalScape Bureau comprises seasoned journalists from Himachal Pradesh with over 25 years of experience in leading media conglomerates such as The Times of India and United News of India. Known for their in-depth regional insights, the team brings credible, research-driven, and balanced reportage on Himachal’s socio-political and developmental landscape.