Uttarakhand to levy tax on water for hydel projects

Even as the hydropower sector takes a beating in Uttarakhand, the state government has decided to impose water tax of 25 paise per cubic meter on hydel projects in the state, a move likely to push power tariffs in northward.

“This move is not going to do anything good for the power sector which is in doldrums in our state, especially when new projects are being delayed due to various factors causing huge burden on the companies. The move will also push the power tariffs upward further in the state,” said a top official of a hydropower company.

A total of 3,600 megawatt (Mw) of power is being produced by various hydel projects in Uttarakhand, where nearly 70,000 million cubic metres of river water is being used, according to an official estimate. The hydropower sector, however, had turned negative after a series of hydel projects were scrapped in the wake of environmental and religious protests in 2010.

A decision to levy water tax was taken by a meeting of the state Cabinet here late last week presided over by chief minister Vijay Bahuguna.

During the meeting, it was decided to bring a separate legislation to impose water tax in the state where companies like GVK, Lanco, Reliance, GMR, THDCIL, NTPC, UJVN Ltd are developing new projects or have already set up some projects.

When contacted, an irrigation department official told Business Standard the department is preparing a draft Act through which the new surcharge will be imposed. The official also claimed that water tax is being levied in Jammu and Kashmir at 25 paise per cubic metre. In addition to this, some European nations and Australia also have water tax policy. On the same pattern, Uttarakhand can also generate a revenue of Rs 1,700 crore every year, the official claimed.

However, the move was opposed by top officials of a host of hydropower companies. “This initiative will further spoil the hydropower sector. We should allow such water tax only when the sector gets a boost,” said a top official of UJVN Ltd, the state-run power generation company.

BS