Chandigarh: After its water cess was struck down, the Himachal Pradesh government has imposed a new ‘land revenue cess’ on hydroelectric projects, a move that will place an annual financial burden of nearly ₹200 crore on Punjab.
Under the new decision, the Bhakra Beas Management Board’s (BBMB) three major projects will face a combined annual levy of ₹433.13 crore, which will be shared by Punjab, Haryana and Rajasthan. The BBMB has conveyed its objections to the Himachal Pradesh government. Earlier, the Punjab government had also sent its objections to the BBMB on December 24, 2025.
At a meeting held on January 3, the Himachal Pradesh chief minister told senior officials from Punjab, Haryana and Rajasthan that the two percent land revenue cess on hydro projects would have to be paid.
Himachal Pradesh had earlier imposed a water cess on hydro projects on March 16, 2023. That levy would have put an annual burden of about ₹400 crore on Punjab alone, but the Centre later declared it illegal. In March 2024, the High Court also ruled the water cess unconstitutional. At the time, Himachal Pradesh had planned to collect nearly ₹2,000 crore from 188 projects through the water cess.
Following the court ruling, the Himachal government adopted a new route and issued a gazette notification on December 12, 2025, imposing a two percent land revenue cess on hydro projects. The cess has been levied for non-agricultural land use and objections were invited from stakeholder states after the notification. Punjab submitted its objections on December 24.
Punjab has argued that hydro projects are not commercial ventures but public interest projects and that compensation had already been paid at the time of land acquisition. It has also said that land revenue should apply only to the value of land, not to the entire cost of a project.
Heavy burden on three major projects
According to the Himachal government’s notification, the Bhakra Dam has been valued at ₹11,372 crore, resulting in an annual cess of ₹227.45 crore. The Pong Dam, valued at ₹2,938.32 crore, will attract ₹58.76 crore annually, while the Beas-Sutlej Link Project, valued at ₹7,345.8 crore, will face a yearly cess of ₹146.91 crore.
In addition, Punjab State Power Corporation Limited’s Shanan project will bear a separate annual burden of ₹16.32 crore.
