Himachal Pradesh Chief Minister Sukhwinder Singh Sukhu’s biggest resource mobilisation move to tackle state’s worst fiscal crisis seems to have hit a roadblock, as also possibly a legal tangle.
Within three days, after the state assembly passed a bill — Himachal Pradesh Water Cess on Hydropower Generation Bill, 2023 to levy cess on water being used by hydro-power producer companies in the state, two neighbouring states have come-out against the bill.
State Governor Shiv Pratap Shukla is yet to give his assent to the bill which Chief Minister claims will fetch an additional resource of Rs 4000 cr to the state every year from 172 hydel projects.
Till now, the state has been getting a free power share of 12 percent from the independent power producers including Bhakra-Beas Management Board (BBMB), NHPC, NTPC, SJVN Ltd and private power producers.
Himachal Pradesh also gets a share of 7.19 percent from the BBMB as per decision of the Supreme Court as its legitimate right in the combined assets of three states — Punjab, Haryana and Himachal Pradesh under Punjab State Reorganisation Act 1966.
This week, the Himachal Pradesh assembly passed a bill unanimously to levy water-cess on the hydro-power projects, located in the state. The bill replaced an ordinance which the Congress government had promulgated only a month back.
Quick to oppose the move, Punjab and Haryana state assemblies passed separate resolutions to strongly oppose hill state move to impose Water Cess on Hydropower Projects for non-consumptive use of water for power generation.
In the Haryana assembly, Chief Minister Manohar Lal Khattar said, “This water cess is illegal and not binding on the State of Haryana and therefore the same should be withdrawn immediately by the Himachal Government.”
The resolution passed by the House even has urged the central government to prevail upon the Himachal Pradesh government to withdraw the bill/ordinance as the same is in violation of the Central Act i.e. Inter State Water Disputes Act, 1956.
“With this new levy there will be an additional financial burden amounting to Rs 1, 200 crore per annum on partner states out of which around Rs 336 crore will be burden on the state of Haryana. This new levy is not only an infringement of the exclusive rights of the state over its natural resources but will also result in additional financial burden for generation of power resulting in the higher cost of generation of electricity, ” Khattar said.
On the same lines, Punjab Chief Minister Bhagwant Mann and Water Resources minister Gurmeet Singh Meet Hayer said they would not pay a single paisa to Himachal Pradesh and even warned that Punjab could also levy cess on apple trucks coming to the state from Himachal and also on tourists going to the hills.
Mann, while terming it an attack on the federal structure, said that it violates the Inter State River Water Disputes Act, 1956.
In Shimla, adopting a firm stand, Chief Minister Sukhvinder Singh Sukhu told the state assembly on Thursday that Himachal Pradesh was well within its right to impose water cess on hydro-power generation as it didn’t in any manner had violated the Inter State River Dispute Act 1956.
“There is no logic in the contention of our neighbouring states that Himachal has violated the Inter State River Dispute Act 1965 as the imposition of the cess in no way impacts the flow of water to the two states, ” he said
Sukhu reminded that none of the provisions of the Water Cess on Hydro Power Generation Act 2023 violate the water rights of the two states and moreover water was a state subject.
Despite a total of 45, 000 hectares of land getting submerged under the three reservoirs of the Bhakra Beas Management Board (BBMB), Himachal has not got any water rights and on the contrary the state has suffered adverse environmental impact, resulting in climate change, he countered.
The Chief Minister said it was not just agriculture and horticulture production that had been affected after Bhakra dam came-up but people living in the vicinity of these reservoirs were facing social and health issues.
The revenue generated from imposition of water cess on BBMB project shall be distributed equally among all five states, including Himachal as Bhakra Nangal project is a joint venture of Rajasthan, Punjab, Haryana, HP, Delhi and Chandigarh, Sukhu assured.
He also clarified the position on the Shanan hydro project, which he said will be transferred to Himachal from Punjab after March 2024 in accordance with the period of validity of lease agreement.
Earlier Deputy Chief Minister, Mukesh Agnihotri , who holds the water resources portfolio said water cess had been imposed on 172 hydel projects and it will in no way impact the water flow into Punjab and Haryana.
“We have imposed water cess on the same analogy as the governments of Uttarakhand and Jammu and Kashmir, as the state has the right to impose any tax on usage of water, which is state subject. Agnihotri said the cess has been imposed for non-consumptive use of water for hydro-power generation by projects located within Himachal, ” Chief Minister claims that state’s fiscal health is precarious because of Rs 75, 000 cr debt burden, Rs 10, 000 cr pending liabilities of revised pay and arrears of the employees and pensioners beside annual repayments of loans and interests on borrowings.
The Congress, on return to power, had to raise Rs 4300 cr additional loans to pay salaries and wages to the employees beside committed liabilities on development, and welfare schemes. Thus, there is a dire need to raise resources.
The government has also proposed to levy Rs 10 as cow-cess on each bottle of liquor sold in the state. This will return a revenue of Rs 100 cr per annum.
Levying cess on water in the rivers flowing through the state is also a move to increase state income.