"Power Ministry had finalised the policy last month and sent to the Finance Ministry for vetting before placing it for the Cabinet approval," a source said.
The source said: "The policy may be listed this month for deliberation and approval by the Cabinet." Once it is approved, the distinction between large and small hydro plants would go, which would enable India to achieve clean power capacity of 225 GW by 2022.
At present, a hydro power project of up to 25 MW is classified under renewable energy and is entitled to various incentives provided by the government. Projects beyond this capacity are not in this category and hence not entitled to the benefits.
Out of the 30 GW installed power generation capacity, 44.59 GW comes from large hydro projects (above 25 MW) and 57.26 GW from other renewable power generation capacities.
India has set an ambitious target of adding 175 GW of renewable energy capacity by 2022 which includes 100 GW of solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro-power (up to 25 MW capacity each).
Under the policy, the government will provide interest subvention of 4 per cent during construction for up to 7 years and for 3 years after the start of commercial operation to all hydro power projects above 25 MW.
A Hydro Power Fund would be created under the power ministry for providing funds to the projects under the policy.
The policy also provides for Hydro Purchase Obligation (HPO) for hydro projects of over 25 MW capacity. Under this, the discoms would be mandated to buy a proportion of power from these plants.
However, this benefit would be available to those hydro power plants, which would be able to begin commercial operations after five years of notification of this policy.
The policy would also mandate power ministry to engage with bankers and financial institutions for modifying lending terms and conditions for hydro power projects.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)