The 1,856 MW Sawalkote Hydro Electric Project on the Chenab River is facing multiple challenges due to technical and financial issues. It had received techno-economic clearance from the Central Electricity Authority (CEA) seven years ago in 2018 but progress has been slow and tardy.
This was stated by Chief Minister Omar Abdullah, who also holds the power portfolio, in the Legislative Assembly in reply to a question raised by NC MLA from Banihal, Sajad Shaheen. The CM said that despite substantial pre-construction progress and the formal transfer of the project to NHPC Limited for execution, “the final approval and financial closure are still pending.”
The delay is due to engineering challenges, prolonged regulatory clearances and an ongoing review of the project’s cost and financial viability, estimated at Rs 20,136 crores (over Rs 32,000 crore at 2025 price level) at 2016 price levels.
He informed the House that the project, initially conceived and developed by the Jammu and Kashmir State Power Development Corporation (JKSPDC), received a Techno-Economic Appraisal from the CEA on April 18, 2018. It may be mentioned here that two months later, Mehbooba Mufti’s government fell when the BJP withdrew support to it. Political instability that prevailed a couple of years after that was also a contributing factor.
JKSPDC does not have enough corpus of funds at its disposal to invest in this mega project though there was posturing by politicians here that the project should be undertaken in the state sector. For that, the financial wherewithal just does not exist and despite vilification of NHPC for a long time, Sawalakote had to be given to them only.
As an entity, JKSPDC was set up on February 16, 1995, during the Central rule in J&K and was created as a government-owned enterprise by carving out the generation sector from the existing Power Development Department (PDD). Elections to the Legislative Assembly were held and Dr Farooq Abdullah became the Chief Minister in October 1996, over 18 months later. He had started a scheme called Roshni purportedly to raise money needed for setting up power plants. However, this scheme became hugely controversial as it led to alienation of thousands of kanals of government land with negligible mobilisation of revenue.
“As per the initial schedule, the project was to be completed within 96 months from the zero date, with May 31, 2026, set as the reference point, excluding a 24-month pre-construction phase. However, the project timeline has been derailed due to multiple factors,” the CM said.
In 2021, the J&K government signed a Memorandum of Understanding (MoU) with NHPC Limited, transferring the project under a Build, Own, Operate, and Transfer (BOOT) model. Under this arrangement, NHPC will own and operate the project for 40 years after commissioning, after which ownership will revert to the JKSPDC, Abdullah said.
It may be mentioned here that the ownership of different hydropower projects within J&K has been a subject of much politicking. Local politicians often alleged in the past that these projects produced power and gave it to Northern Grid instead of to consumers within J&K. Deliberately seeking to mislead that these projects were set up by the NHPC as successive state governments failed to initiate any projects on their own.
“NHPC is presently conducting a comprehensive financial and technical viability review, in consultation with the CEA, before the final Detailed Project Report (DPR) is updated and approved for construction,” Abdullah said.
Before its transfer, the JKSPDC had completed several crucial pre-construction components that laid the groundwork for future construction in the rugged Chenab basin.
These include the construction of a 1500-metre-long access tunnel to the dam site, a 178-metre steel bridge across the Chenab River to facilitate material movement, and 18.5 km of approach roads connecting both banks.
The minister said that these works were vital for ensuring logistical access in the challenging terrain spanning Ramban, Reasi, and Udhampur districts.
Land acquisition remains one of the project’s most complex challenges. The total land acquisition award is valued at Rs 313 crore, of which Rs 40.41 crore has been released to affected families so far, while Rs 272.59 crore is still pending disbursement. The reply acknowledged that delays in compensation payments had slowed full-scale land takeover but assured that rehabilitation and resettlement plans were being implemented with priority given to the affected families.
The plans include compensation packages and employment opportunities for locals in various phases of project execution. The minister also pointed to several reasons behind the project’s continued delay, including lengthy approval processes from key central agencies like the CEA, Central Water Commission (CWC), Geological Survey of India (GSI), and the Ministry of Environment, Forest and Climate Change (MoEFCC).
The difficult mountainous terrain, seismic vulnerability, and environmental concerns related to the submergence of agricultural land and the displacement of communities have further compounded the challenges.
The minister said that the NHPC was still finalising its cost-benefit framework and assessing financial feasibility before seeking formal investment sanction.
Once the financial and technical viability is confirmed and the DPR updated, the project will move into its full-fledged construction phase.
The government expects this process to take several more months, with additional groundwork and mobilisation likely to follow before any major on-site activity begins. The minister said that when completed, the Sawalkote Hydro Electric Project is expected to transform J&K’s power sector. It would add 1,856 MW of generation capacity to the grid and create nearly 6,500 direct and indirect jobs during peak construction.
The project, which will be among the largest in north India, is expected to reduce J&K’s reliance on electricity imports, especially during winter months, and enhance energy security across J&K. One constant worry the various state and Central governments had to face was the possible Pakistani objections under the framework of the Indus Waters Treaty (IWT). With the Treaty put in abeyance on April 23 this year, that is one impediment now out of the way.
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