Delayed hydropower projects push up costs by over Rs 30,000 crore

Seven projects faced a cumulative cost overrun of Rs 31,884 crore as of March 2023, according to a Business Standard analysis of data from the Ministry of Statistics and Programme Implementation monthly reports.

This includes the Subansiri Lower project in Arunachal Pradesh (Rs 14,962.2 crore cost overrun), Himachal Pradesh’s Parbati project (Rs 7,215 crore) and Tapovan-Vishnugad (Rs 4,124.5 crore) in Uttarakhand. The data covered projects of Rs 150 crore or more.

The government has recently sought to ease the way for increased use of hydroelectric power, with a lower burden of environmental clearances for certain kinds of plants. Pumped storage hydropower projects involve a pair of water reservoirs used to generate electricity, located at different altitudes, with a turbine connecting to produce electricity, as water flows from one reservoir to the next. In May, the environment ministry exempted such projects from the environmental impact assessment regime as they have a lower environmental impact, ‘compared to classical hydro projects as well as irrigation and water supply projects,’ according to the ministry notification on the change in rules.

Other cost overrun projects such as the Tehri Pumped Storage Plant (Rs 3,168.6 crore) are expected to play a role in improved system reliability by supporting the grid during off-peak hours. The Vishnugad Pipalkoti project (Rs 1,368.8 crore) in Uttarakhand implemented by the Tehri Hydro Development Corporation seeks to increase electricity supply through renewable sources.

Some of the increased costs are to do with delayed implementation. The average delayed hydropower project in India is over six years late.

At least a dozen hydroelectric projects are facing delays ranging from a few months to fifteen years; though not all have yet reported cost overruns.

The Parbati project in Himachal Pradesh has faced a 174-month delay. Others facing a delay include Subansiri Lower (165 months), Vishnugad Pipalkoti (144 months) and Tapovan-Vishnugad (141 months). The average for the dozen projects identified in the analysis is 79 months or 6.5 years (chart 2).

A few reasons for time overruns were attributed to disputes with local villagers and delay in finalising agreements.