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Cap on PMDP funding puts question mark over 20 hydropower projects.

The government of India’s decision to put a cap on financial assistance under Prime Minister Development Program (PMDP) has put a question mark on the fate of twenty hydro-power projects which face the dearth of funds as a result.

Under the Rs 80,000 crore package that was announced by the Prime Minister NarendraModi in 2015, Rs 2000 were meant for development of 15 small hydropower projects. Later five more projects were added under the program taking cumulative capacity to more than 350-MW.

At least 10 of these projects are to be set up by Jammu and Kashmir Energy Development Agency which works under science and technology department, while the remaining projects would be executed by state Power Development Corporation (PDC).

An official of S&T department said during at least three meetings in the past union government had agreed to provide 100 percent grants for development of the projects handed over to them.

But, he said, at the last minute they were later told that funding would be provided as per existing schemes in vogue for different states.

“Under these schemes there is a cap at Rs 20 crore,” said the official.

This would mean that government would have to arrange funding on loans from financial institutions for execution of the projects.

Another official said the matter was taken up by S&T department with union renewable and power ministries. “We told them that extending guidelines of existing schemes to the PMDP projects is negation of PMDP package wherein we are supposed to get 100 percent funding. But there was no outcome,” said the official.

He said the department was now pushing to secure funding on 40:60 pattern for these projects. “We have completed DPRs for all 10 projects out of which four projects are ready to be allocated for execution. But the problem is that government of India hasn’t released the funds so far as the ministry want us to follow the existing schemes,” said the official.

The issue of funding was also raised by the department with Governor NN Vohra recently. An official said the department is now contemplating to raise resources for these projects through Renewable Energy Corporation (REC) which is being set up to harness solar energy by lifting borrowing from open market.

The PDC, which is executing projects up to 25-MW under the scheme, is faced with similar financial hurdle. An official said they were assured funding on 30:70 ratio by union government after the package was announced. But, the official said, the government “retracted from the word” later and offered only Rs 20 crore funding for each project.

“As of now there is no final word on the funding,” the official said, adding the Corporation has completed tendering for 12-MW Karnah in Kupwara.


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