Karnataka Cancels 386 Small Hydro Projects as Private Firms Fail to Secure Clearances
Karnataka, India's top-ranked state for small hydro projects in the renewable energy sector, has cancelled 386 of 519 allotted projects, according to data from the Karnataka Renewable Energy Development Board (KREDL). These projects, ranging from 1 to 25 MW, were aimed at generating 2,045 MW of power but were never commissioned due to the failure of private firms to obtain necessary clearances.
The cancellations come at a time when the Union Cabinet approved a Rs 2,584.60 crore incentive for private participation in the small hydro sector to install 1,500 MW of alternative power, amid rising fuel prices due to the West Asia crisis. Of the 519 projects targeted to generate 3,198 MW, only 108 have been commissioned, producing 943 MW. The installed capacity stands at 1,284 MW from 133 projects.
Most allotments occurred during 2009-10 and 2014-15, when central financial assistance of Rs 5 crore per project was announced. However, many firms failed to obtain forest and panchayat clearances, leading to cancellations. A senior KREDL officer stated, 'The majority of projects were cancelled because clearances were not obtained. Firms could not avail the aid as projects needed to be commissioned first.'
The highest number of cancellations occurred for projects allotted in 2022-23: 225 projects aimed at generating 1,123 MW were cancelled, with only five projects of 42 MW launched. KREDL data also shows that firms linked to Bengaluru businessman and BJP worker Vignesh Shishir were allotted 11 projects for 84 MW, but these were cancelled between 2014-2018 after clearances were not obtained. Shishir faces multiple fraud cases and has sought court investigations into dual citizenship claims against Congress leader Rahul Gandhi.
Other major defaulters include Bhoruka Power Corporation, which had 11 projects of 75 MW cancelled. KREDL officials noted that multiple three-year extensions were granted before cancellations. A 2016 analysis by The Indian Express showed that 298 small hydro projects allotted between 2011-2016 went to 14 firms operating with 64 different entities.
The cancellations highlight systemic challenges in project implementation, including clearance delays and lack of private sector follow-through, despite government incentives to boost renewable energy.
