The Cabinet Committee on Economic Affairs — chaired by Prime Minister Shri Narendra Modi — has approved the investment of INR45.26 billion ($590.8 million) for construction of the 540 MW Kwar Hydro Electric Project on the Chenab River in Kishtwar district of Union Territory of Jammu and Kashmir, India.
The project will be implemented by M/s. Chenab Valley Power Projects Private Limited (CVPPL), a joint venture company between NHPC Limited and Jammu and Kashmir State Power Development Corporation (JKSPDC), with equity contribution of 51% and 49% respectively.
The project received environmental clearance in April 2017.
The government of India is extending a grant of INR698 million ($9.1 million) toward the cost of enabling infrastructure and also supporting the Union Territory of Jammu & Kashmir by providing a grant of INR6.55 billion ($85.5 million) for the equity contribution of JKSPDC (49%) in CVPPPL. NHPC will invest its equity (51%) of INR6.82 billion ($89 million) from its internal resources.
The Kwar Hydro Electric project will be commissioned within a span of 54 months, the government said. The power generated from the project will help in balancing the grid and will improve the power supply position.
To make the project viable, the government is taking several steps: extending the exemption form levy of water usage charges for 10 years after commissioning of the project, reimbursing the state’s share of the Goods and Services Tax and providing a waiver of free power at 2% per year in a decremental manner. This last step means the free power to the Union Territory of Jammu & Kashmir would be 2% in the first year after commissioning of the project and thereafter will increase at 2% per year and shall be 12% from the sixth year onwards.
The construction activities for the project will result in direct and indirect employment to around 2500 persons and will contribute to the overall socio-economic development of Jammu & Kashmir. The benefits to the territory from free power are about INR45.5 billion ($59.4 million) and water usage charges are INR49.4 billion ($64.5 million) during the project life cycle of 40 years.
