During its last session, Power Finance Corporation chairman Udesh Kohli had listed the recommendations that had been finalised in the presence of delegates, experts, HP State Electricity Board chairman A. K. Goswami and members of the Board.

Kohli admitted that financing of hydel projects continued to be a major problem because of long gestation period, but that the hydel sector had begun to be recognised as a priority area vis-a-vis the thermal power.

According to draft recommendations, the seminar stressed on the need for greater private sector participation in hydel generation, but suggested that only small- and medium-sized projects be handed over to the private sector.

The project should be thoroughly investigated and statutory clearance (environmental, forest etc.) obtained before being handed over to the private sector. The seminar also favoured the execution of bigger projects only by the State government, Central government or as a joint venture.

The seminar, which also deliberated on the financial aspects, recommended that institutions with funds having longer maturity periods like pension funds, provident funds, should be freely allowed to invest in hydel generation. The Industrial Development Finance Company should also be allowed to provide credit enhancement mechanism in the form of long-term guarantees, and tax-free hydro-bonds should also be encouraged.

It hailed the announcement by the Union Energy Minister regarding the setting up of Central Power Trading Corporation and inclusion of projects up to 25 MW in small- and micro-hydel projects, which need to be executed by State Electricity Boards and State Irrigation Departments.

Other recommendations include evolving a model power purchase agreement, permitting States to raise additional funds beyond plan allocation for exploitation of hydro potential and separate finance corporation for hydel projects.