Centre says water cess on hydel projects ‘unconstitutional’, HP says court to decide (original) (raw)

The Himachal Pradesh government will not follow the Centre’s advice to withdraw the water cess imposed on hydropower projects in the state as water is a state subject, Deputy Chief Minister Mukesh Agnihotri Tuesday said.

Asserting that the stand of the Centre on the issue was totally unjustified, Agnihotri said that the Constitutional validity of the Himachal Pradesh Water Cess on Hydropower Generation Act 2023, passed by the Vidhan Sabha on March 16, 2023, to impose water cess on hydropower projects would be decided by the court, and not by the Union government.

Talking to the mediapersons in Shimla, he said the state government has already constituted a water cess commission and appointed its chairmen and members and some power producers and the electricity board have already paid a cess amounting Rs 28 crore.

Terming any additional charges or duties on power generation as unconstitutional, the Union energy ministry, in a letter to chief secretaries of all the states on October 25, said that no state has the authority to impose water cess.

Earlier, on April 25 too the Centre had warned the state governments against imposing water and power cess. Citing Articles 286, 287, and 288 of the Constitution, it had emphasised that imposing such fee on thermal, hydro, wind, and solar power generation is beyond the jurisdiction of the states.

After enacting the law on water cess, the Congress government in the hill state also set up the Himachal Pradesh Water Cess Commission for tax collection. The commission issued notices to 172 hydropower projects on the basis of assessment of the water drawn for generation by installing flow-measuring devices to compute the cess amount. While three private power companies complied, public sector companies challenged the order in the Himachal Pradesh High Court, where the case is pending.

Agnihotri, who also holds the portfolio of the Jal Shakti Department, meanwhile, said name of the Water Cess Commission would be changed to Water Commission and it would deal with all the water-related state and interstate issues in the future/

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There are 23 dam projects with a total capacity of 9,203 MW power in Himachal Pradesh run by the National Hydro Power Corporation (NHPC), National Thermal Power Corporation (NTPC), Bhakra Beas Management Board (BBMB), Satluj Jal Vidyut Nigam Limited (SJVNL) and Independent Power Producers (IPP), while six more projects with a capacity of 1,916 MW are under construction.

Agnihotri said the letter written by the Union government is aimed at creating confusion among power producers, and the Centre has asked the public sector hydropower companies not to pay the cess and challenged the Act in court.

The government has been very considerate and has substantially reduced the water cess charges on the plea of hydropower producers and against initial estimates of Rs 4,000 crore revenue, now the government would annually earn Rs 1,842 crore, he added.

(With PTI)