J&K’s New NHPC Power Deals Trigger Debate on Ownership and Energy Future

Hemani Kandhari

2 April, 2026: As the Assembly session continues in Jammu & Kashmir, a fresh political and policy debate has emerged over new hydropower agreements and the region’s long-term energy future.

The J&K government on March 27 signed an agreement with NHPC Limited in Jammu to develop two major hydropower projects — Uri-I Stage-II (240 MW) and Dulhasti Stage-II (260 MW), with a combined capacity of 500 MW. Both projects will be executed under a 40-year BOOT (Build-Own-Operate-Transfer) model, after which ownership will revert to the Union Territory.

The move has drawn criticism from PDP MLA Waheed Ur Rehman Para, who questioned why the region continues to rely on central agencies for developing its key hydropower assets. He pointed out that under existing agreements, Jammu & Kashmir receives just over 12% of free electricity from NHPC-operated projects, while the remaining power is sold in the market—forcing the UT to purchase electricity at higher rates to meet its own demand.

Power Paradox in a Resource-Rich Region

Jammu & Kashmir has an estimated hydropower potential of around 18,000 MW, of which nearly 15,000 MW has been identified. However, only about 3,540 MW has been developed so far. Despite abundant water resources, the region remains power-deficit and relies heavily on external power purchases, particularly during winter months—often translating into higher costs and supply constraints for consumers.

NHPC currently operates six major projects in the region—Salal, Uri-I, Dulhasti, Sewa-II, Uri-II, and Kishanganga—with a combined capacity of 2,250 MW. In addition, large projects such as Ratle (850 MW) and Pakal Dul (1,000 MW) are under construction through joint ventures.

How the BOOT Model Works

Under the BOOT model:

* NHPC will build, own, and operate the projects for 40 years

* J&K will receive around 12% free power

* The remaining electricity will be fed into the national grid

* The UT will purchase additional power at market rates if needed

* Ownership will transfer back to J&K after 40 years

Critics argue that this structure is inherently disadvantageous, as hydropower projects typically have a lifespan of around 45 years—meaning J&K may gain control only toward the end of their most productive phase.

Development vs Ownership Debate

The issue highlights a broader policy dilemma: whether to prioritize faster development through experienced central agencies or push for greater local ownership of natural resources.

On one hand, large hydropower projects require significant capital investment and technical expertise—areas where NHPC has established experience. The BOOT model can help ensure timely project completion and may ease short-term electricity shortages.

On the other hand, concerns persist that while local resources are being utilized, control and long-term financial returns largely remain outside the region for decades. Political leaders argue that the current framework does not adequately benefit the people of J&K.

The demand for greater ownership is not new. In 2006, a working group led by C. Rangarajan recommended transferring projects like Dulhasti to the state, but the proposal was not implemented. A 2011 state cabinet sub-committee also advocated linking new projects to the transfer of existing ones.

The issue has since gained political traction across party lines. Leaders have raised the matter in Parliament and submitted memorandums to President Droupadi Murmu on March 13, seeking a fairer share of benefits from the region’s natural resources.

The government maintains that hydropower development has accelerated in recent years, particularly after developments related to the Indus Waters Treaty, and has set a target of expanding capacity to 11,000 MW by 2035.

However, as Jammu & Kashmir continues to purchase costly power despite its vast hydropower potential, the debate over ownership, revenue sharing, and long-term control remains unresolved. With rising demand and growing political pressure, the central question persists: should J&K continue relying on central agencies for faster development, or seek greater control over its own energy resources?