Shimla: The Himachal Pradesh Water Cess Commission — the panel set up to collect the controversial levy on hydropower projects — has issued bills to the tune of Rs 871 crore to 172 hydel projects in the state for a five-month period (March-July 2023), ThePrint has learnt.
The move comes even as the Himachal Pradesh High Court has yet to decide on the petition filed by power developers — including central public sector undertakings (PSUs) and private players — challenging the legality of the water cess.
Speaking to ThePrint, Himachal Pradesh Water Cess Commission Chairman Amitabh Avasthi said the panel has started functioning.
“Bills have been raised. There is no stay on levying the cess. We are hopeful that cess would enhance the state’s revenue,” he said.
The power developers have been given 10 days to deposit the cess from the date of the bill, 4 October.
An official of the commission who didn’t wish to be named said the billed amount was Rs 871 crore.
“We have collected the data from the jal shakti and energy departments. Besides, we have written to all projects to install a flow meter to map the readings of water usage,” the official added.
Rajesh Sharma, president of the Bonafide Himachali Hydro Power Developers Association — an association of small and independent hydropower developers in the state — said power companies are against the cess.
“Since there is no bar from the court, the commission is well within its rights to raise the bills,” he added. “But we are hopeful that the court will deliver justice. The cess is not in the favour of small hydropower projects,” he said.
Of the state’s 172 hydropower projects, 146 — including those of the public sector undertakings National Thermal Power Corporation (NTPC) and National Hydroelectric Power Corporation (NHPC) — are registered with the state government, as mandated by the Himachal Pradesh Water Cess on Hydropower Generation Act.
A senior official of the Himachal Jal Shakti Department said the law mandates power companies with projects within the boundaries of Himachal to register themselves with the commission.
Some of those who have challenged the cess are also registered with the commission, the official added.
‘Himachal not the only state’
The water cess was introduced by the Sukhvinder Singh Sukhu government earlier this year in a bid to raise revenues to tackle the state’s debt burden.
In February, Chief Minister Sukhu claimed that the state had financial liabilities of over Rs 91,000 core.
However, the move has been controversial, with opponents including Punjab and Haryana, which are among the states that use power from these projects and allege it will ultimately inconvenience consumers.
While both states have passed resolutions in their assemblies against the cess, the firms have challenged it in court.
A standing committee had noted in a 2019 report that a water cess could affect the viability of hydropower projects.
On account of the opposition, Himachal reduced the tariff in August, saying that the cut lowered its targeted revenue to Rs 1,800 crore from Rs 4,000 crore.
Apart from the objections raised by Punjab and Haryana, the Centre’s counsel hinted at a hearing in September that the Union government is contemplating contesting this issue in the Supreme Court.
The central government has termed the water cess illegal.
In a letter 25 April to the chief secretaries of all states, R.P. Pradhan, director in the Union Ministry of Power, said “any tax or duty on the generation of electricity, which encompasses all types of generation such as thermal, hydro, wind, solar, nuclear, etc. is illegal and unconstitutional”.
The Himachal government, however, argues that it is not alone in levying the cess, and points to Uttarakhand, Jammu & Kashmir, Telangana and Sikkim as doing the same thing.
Speaking to ThePrint, the first state government official quoted above pointed to a February 2021 ruling by the Uttarakhand High Court, which upheld the Uttarakhand Water Tax on Electricity Generation Act, 2012.
“As far as the central government is concerned, the cess is also levied in Jammu & Kashmir, and the central government is collecting it since J&K is now a Union territory,” the official added.
The next hearing in the case is scheduled for 16 October.
(Edited by Sunanda Ranjan)