The Union Power Ministry has initiative to boost hydro projects. It is preparing a booster dose of financial incentives and easier green norms to energise the hydel sector that would also prop up 136 private projects, including those by companies aggregating a capacity of 40,000 mw, or enough power to light up 8-10 cities of Delhi's size.
A committee set up by the Union Power Minister Jyotiraditya Scindia has recommended excise duty exemption for cement, steel and equipment used for constructing hydel projects. It has also suggested waiver of service tax on construction activities.
These exemptions are expected to substantially reduce project costs and subsequently the electricity tariffs. Hydel projects cost more than thermal plants and take longer to build. They also face geographical uncertainties during construction besides threats from local activism. All these make hydel projects unattractive in terms of higher tariffs and other associated risks.
As a result, promoters are left struggling to tie up funds. Lower capital costs are expected to improve tariff and make hydel projects more attractive.