Debt-ridden Punjab faces Rs 200 cr annual burden as Himachal imposes fresh 2% levy on hydropower projects
PTC Web Desk: After facing legal setbacks over its earlier water cess, the Himachal Pradesh government has introduced a fresh levy on hydropower projects by imposing a 2 per cent “Bhumi Maliya Cess” (land premium cess). The decision is expected to place an additional annual financial burden of nearly Rs 200 crore on Punjab.
As per a report in Dainik Bhaskar, the new levy will also significantly impact projects operated under the Bhakra Beas Management Board (BBMB), with three major hydropower projects together facing an annual burden of Rs 433.13 crore. This cost will ultimately have to be shared by Punjab, Haryana and Rajasthan, the beneficiary states.
The BBMB has formally registered its objection to the Himachal Pradesh government’s decision. Earlier, on December 24, the Punjab Government had also submitted written objections to the BBMB against the proposed levy.
During a meeting held on January 3 with senior officials from Punjab, Haryana and Rajasthan, the Himachal Pradesh Chief Minister made it clear that hydropower projects would be required to pay the newly imposed cess. The state government has maintained that the levy has been imposed under non-agricultural land use provisions.
This is not the first attempt by Himachal Pradesh to impose additional charges on hydropower projects. On March 16, 2023, the state had introduced a water cess on such projects, a move that would have resulted in an annual burden of around Rs 400 crore on Punjab alone.
However, the Union government declared the water cess illegal, and in March 2024, the High Court struck it down as unconstitutional. At that time, Himachal Pradesh had aimed to collect nearly Rs 2,000 crore annually from its 188 hydropower projects through the water cess.
Following the court ruling, the Himachal government adopted an alternative route and issued a gazette notification on December 12, 2025, formally enforcing the 2 per cent Bhumi Maliya Cess on hydropower projects. Objections were subsequently invited from stakeholder states.
In its objections, the Punjab government argued that hydropower projects are public utility projects, not commercial ventures. Full compensation was already paid at the time of land acquisition and land premium cess should apply only to land value, not the entire project cost. The state argued that the levy violates the federal structure and infringes upon the rights of partner states.
As per the Himachal Pradesh notification, the annual cess liability on major BBMB projects is as follows:
Bhakra Dam (Project cost: Rs 11,372 crore): Rs 227.45 crore
Pong Dam (Rs 2,938.32 crore): Rs 58.76 crore
Beas–Sutlej Link Project (Rs 7,345.8 crore): Rs 146.91 crore
Together, these three projects will face an annual burden of Rs 433.13 crore.
Apart from BBMB projects, the Shanan Hydel Project, operated by Punjab Power Corporation, will also face an additional annual burden of Rs 16.32 crore due to the new cess.
- With inputs from agencies
