SRINAGAR: The Public Investment Board (PIB) has approved a Rs 1,400-crore grant for infrastructure development at Jammu and Kashmir’s 1,800-MW Sawalkote hydropower project on the Chenab river, while referring a separate proposal for Rs 18,730.25 crore in subordinate debt to the Budget Division of the Department of Economic Affairs for consideration.
According to official records accessed by ETV Bharat, the PIB has cleared the project’s funding structure with a debt-equity ratio of 75:25. However, it has not approved the proposed subordinate debt support sought by the Union Ministry of Power.
The Power Ministry had proposed interest-free subordinate debt of Rs 18,730.25 crore during the construction period, to be repaid at an interest rate of one per cent annually over 25 years after the project begins commercial operations.
The proposed financial support was intended to reduce the project’s power tariff from more than Rs 9.57 per unit to above Rs 5 per unit, thereby improving its commercial viability.
The total project cost has been revised to Rs 26,373 crore from the earlier estimate of Rs 35,000 crore. NHPC’s 25 per cent equity contribution has been fixed at Rs 6,243 crore.
Conditions Attached To Approval
The PIB has stipulated that any increase in the equity cost will have to be borne by NHPC, the project’s executing agency. It has also set August 2036 as the tentative completion deadline.
The board has further asked the Power Ministry to include a comparative assessment of costs incurred on NHPC’s other hydropower projects in the draft proposal to be placed before the Cabinet Committee on Economic Affairs (CCEA).
The project still requires formal CCEA approval before construction can formally begin.
Jammu and Kashmir was represented at the PIB meeting by Jammu and Kashmir State Power Development Corporation (JKSPDC) Managing Director Rahul Yadav, who supported the project.
Yadav sought an assurance that the project would be handed back to the Union Territory government free of all encumbrances after 40 years of commercial operations.
He also raised concerns over the reduction in the project’s design energy from 7,994 million units to 7,010 million units, arguing that the revision would reduce the region’s free-power share. He sought compensation for the anticipated loss, but the PIB did not address the issue in its recommendations.
Four-Decade-Old Project
Sawalkote is Jammu and Kashmir’s largest hydropower project, with a proposed installed capacity of 1,800 MW. Spread across three districts, including Ramban in the Jammu region, it covers more than 1,401 hectares, of which over 840 hectares comprise forest land.
Originally developed by JKSPDC, the project remained stalled for nearly four decades amid administrative hurdles, environmental concerns and objections from Pakistan over the construction of a dam on the Chenab river.
The project gained fresh momentum after the Union Territory administration handed it over to NHPC in 2021 under a build-own-operate-transfer model for 40 years.
Its revival has also coincided with India’s suspension of the Indus Waters Treaty with Pakistan following the Pahalgam terror attack in April 2025.
Disagreement Over Project Control
The project has also brought into focus differences over the control of power-sector institutions in Jammu and Kashmir.
Chief Minister Omar Abdullah, who also holds the Power portfolio, told ETV Bharat that the elected government had limited control over JKSPDC and its decisions.
“Unfortunately, the elected government has no control over the JKPDC or its decisions,” Abdullah said when asked whether the Jammu and Kashmir government intended to develop the project independently or through a joint venture with NHPC.
The corporation’s board is headed by Lieutenant Governor Manoj Sinha.
Meanwhile, NHPC opened the first bid worth Rs 5,129 crore in September for Lot 1 Package, covering civil and hydro-mechanical works.
Major infrastructure companies, including Adani Group, Hindustan Construction Company, Patel Engineering, Larsen & Toubro and Rithwik Projects, are among those competing for the contract.
