In Jammu Kashmir, Private Hydro Power Projects Harness Energy Without Paying Water Usage Cess

Srinagar: A dozen private hydropower projects across Jammu and Kashmir are harnessing electricity without paying the water cess resulting in financial losses to the Union Territory, ETV Bharat has learnt.

The apparent water exploitation has compounded fears among the local populace of water scarcity after the prolonged dry spell this summer.

Independent Power Producers (IPP) under J&K State Power Development Corporation and Jammu Kashmir Energy Development Agency operate 12 projects with a combined capacity of 92.75 MegaWatt (MW) across the region.

Initially, the utilities were mandated to promote and implement hydel, solar and wind projects to meet the energy requirement of the state with a project upto 2 MW. Now, the fresh policy has upgraded to upto 100 MWs.

J&K has an estimated hydro power potential of 18,000 MW of which 14,867 MW has been identified. However, only 3,540 MW which amounts to over 23 percent has been harnessed so far.

Utilities like National Hydro Power Corporation and J&K State Power Development Corporation pay the water charges for operating hydro power projects, but the Independent Power Producers have been seeking exemption on usage of water, said chairman Jammu and Kashmir Water Regulatory Authority, Iftikhar Ahmad Kakroo.

This photograph taken on May 15, 2025 shows a general view of the Baglihar Dam, also known as Baglihar Hydroelectric Power Project, on the river Chenab in the Ramban district of Jammu and Kashmir. (AFP)

This, according to him, has resulted in a whopping loss of revenue running between Rs 250-350 crores to the exchequer since they were set up in the last over two decades.

Jammu and Kashmir financial liabilities have been mounting with a total debt standing at over Rs 1.25 lakh crore for the Union Territory in the last financial year.

The hydro projects were approved under hydel policies of 2003 and 2011 with the successive governments extending a host of incentives to private power developers including exemption of water charges.

But the Jammu and Kashmir Water Resources Act approved in 2010 which regulates use of water, vested the ownership of the water resources to the state since the enactment of the law, terminating the ownership of water resources vested with individuals or corporations.

This means the projects deemed to have been set up before 2010 have to pay water usage charges as per the law. The Act also mandates the Authority to oversee and recover the charges from a licensee for generation of electricity etc for trading in any way directly or indirectly in water.

A senior engineer of the Flood and Irrigation department overseeing the hydro projects said they raise invoices for water usage but are not getting dues, resulting in a legal dispute.

"The power project owners claim exemption from paying water usage charges. But as per our understanding, they have been granted exemption from paying taxes. This has resulted in a legal dispute and we are challenging them in the court," he added.

It is learnt that all the private hydropower projects in the region are not covered under the exemption policy, but are taking undue advantage of the government's leniency for private players.

The issue has come under scrutiny after locals raised voice against blocking of water in a stream by a power project owner to operate a project in Kashmir since the last few years, said the engineer.

This summer, due to the drought-like situation, Kashmir faced a deficit of over 50 percent rainfall since June with the operator again blocking the stream, he added.

This situation, according to Chairman Kakroo, has prompted them to seek NOC and licenses by the authority to the private producers for setting up new projects.

This follows after JAKEDA invited bids for 35 small hydropower projects with an estimated over 60 megawatts (MW) power capacity to encourage sustainable energy development and private sector investment last month.

Several hydro power and water experts argued that the incentives like offering exemptions on water charges have to have a timeframe.

A view of Salal Dam built on the Chenab River in Reasi, Jammu and Kashmir (ANI)

Initially, the exemption was aimed at inspiring private players to take up mini or small power projects for meeting the energy requirements.

A power project below 5 MW generation capacity is called mini while above 5W to 25MW is known as a small power project.

“It (exemption) cannot be permanent. The water usage has to be paid by the operator particularly given the changing weather pattern triggering scarcity of water in rivers and streams now,” Ajaz Rasool, a senior hydraulic engineering expert said.

Rasool suggested the government to draw state water management for judicious use of water for different segments like drinking, irrigation and hydro project in the face of prolonged dry spell.

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