India races to build power plants in region claimed by China, sources say

NEW DELHI — India plans to spend US$1 billion (S$1.35 billion) to expedite the construction of 12 hydropower stations in the northeastern Himalayan state of Arunachal Pradesh, two government sources said, a move that could raise tensions with China that lays claims to the region.

The federal finance ministry under Nirmala Sitharaman recently approved up to 7.5 billion rupees (S$121 million) in financial assistance to each hydropower project in the northeastern region, the sources said.

Under the scheme, about 90 billion rupees will likely be allotted for the 12 hydropower projects in Arunachal Pradesh, said the sources, who have direct knowledge of the matter.

The scheme is likely to support northeastern states and help them finance equity holdings in the projects they host. Having state governments on board generally helps in expediting regulatory clearances, locals rehabilitation and negotiations on sharing electricity with the host state.

The plans for the hydropower stations are expected to be announced in the 2024/2025 federal budget that Prime Minister Narendra Modi's government will unveil on July 23, the sources said, declining to be named as the information remained confidential.

The Indian finance and power ministries and China's foreign ministry did not immediately respond to Reuters' requests for comment.

Last August, the government awarded contracts to state-run firms NHPC, SJVNL and NEEPCO for the construction of the 11.5-gigawatt-capacity plants entailing an estimated investment of US$11 billion, as part of a broader project to develop infrastructure in the border region.

None of the companies responded to a request for comments.

These power plants were earlier enlisted with private sector firms, but