States Asked To Frame Policy For Hydel Projects

The proposed policy initiatives relate to buyback of power by state electricity boards, third-party sales, banking, transmission and distribution. Only eight states have so far announced their policies and received private offers to create 500 mw fresh capacity in the small hydel power sector.

The ministry has offered to chip in with interest subsidy to private operators, arranged through financial institutions to help set up small hydel projects.

The ministry provides capital subsidy to state electricity boards for these projects. However, there is a move to discontinue this in favour of interest subsidy, which is cheaper.

The main policy hurdle is the condition imposed by many states that power generated should be compulsorily supplied to state grids and that the SEBs would control transmission and distribution.

 

Sources said the small hydel power sector would witness a boom if these restrictions could be eased.

The ministry of non-conventional energy sources communication to states underlines the generation potential, especially in the North-East, the Western Ghats and other hilly regions, which could be realised if clear policies were announced to attract private players.

A number of private proposals refer to captive generation for supplies to a cluster of villages or an industry in the vicinity of the small hydel project.

Transmission over long distances to feed the SEB grid is unviable for small units. Sources said the power crisis in rural areas would be alleviated if the state governments allowed captive local distribution by small hydel projects.

The source said ministry of non-conventional energy sources would not advise the states on the policy they should have for small hydel projects.

A parliamentary standing committee on energy has also asked the states to speed up clearances for these projects by instituting a single window agency and a suitable policy.

As against the eighth plan target of 200 mw, only about 90 mw fresh capacity is likely to be created by 1996-97, the final year of the plan.

The committee said in addition to problems with SEBs, promoters of small hydel projects have to contend with the environment ministry for land acquisition and forest clearances. The environment ministry has been urged to quickly clear projects up to 5 mw.