Amended hydro policy in Himachal Pradesh to improve cash flows

The amended hydro policy in Himachal Pradesh will improve cash flows for developers, India Ratings and Research (Ind-Ra) said today.
"Himachal Pradesh (HP) Government's recently announced amendment in the Hydro Power Policy 2006, will ease the procedural formalities and is likely to result in higher cash flows in the initial years for projects in the Chenab basin in the state," Ind-Ra said in a statement.
Ind-Ra expects hydro projects in the region to become more amenable to debt funding.
Ind-Ra also believes that as a result of policy changes, bids for new projects in the basin will result in more competitive levelised tariffs, since the tariffs will not be front loaded.

The policy amendments have been approved by the state cabinet for hydro power plants bid out on basis of the international competitive bidding in the Chenab basin in the Himachal Pradesh.
The harnessed hydro power of Himachal Pradesh represents around 8 per cent of the country's total hydro power. The estimated hydro power potential in the state is 27 GW, with only 4GW harnessed so far. The Chenab basin has the potential of 4GW and is among the least developed river basins in the state.
As per the amended policy, the projects in the Chenab basin will now have the option to defer the sharing of 12 per cent-15 per cent of free power with the state to the thirteenth year from start of operations and also extend the sharing of free power over a long tenure of 18 years compared to the earlier 12 years.

The quantum which is deferred will be recovered in a uniform percentage over a period of 18 years.