The long-delayed Kishau Multipurpose Project has entered a new phase after an agreement involving Himachal Pradesh and five other states, with Chief Minister Sukhvinder Singh Sukhu describing the outcome as a major gain for the state’s financial interests.
For Himachal, the central issue in the negotiations was not simply the construction of the hydropower and water-storage project, but who would bear the cost of generating electricity and how the state would benefit from the use of its natural resources.
Sukhu said the agreement followed nearly three years of negotiations by his government, which had opposed an arrangement under which Himachal would have faced a substantial financial liability for its share of the project’s power component. According to the chief minister, the revised arrangement means Himachal will no longer have to make the kind of investment that had earlier been envisaged, while securing a continuing financial return from the project.
The chief minister has estimated that the new arrangement could generate annual revenue of around Rs 1,200 crore to Rs 1,500 crore for Himachal Pradesh without fresh investment by the state.
The Kishau project has been under discussion for years and is designed to use the waters of the Tons, a major tributary of the Yamuna, for multiple purposes, including water storage, irrigation, drinking-water supply and power generation. The project is located along the Himachal Pradesh-Uttarakhand border and is intended to benefit six basin states — Himachal Pradesh, Uttarakhand, Uttar Pradesh, Haryana, Rajasthan and Delhi.
The project has a long history of delays. It was declared a National Project in 2008, while the joint venture between Himachal Pradesh and Uttarakhand was incorporated in 2017 to facilitate its implementation. The earlier cost estimate accepted by the Central Water Commission was around Rs 11,550 crore at 2018 price levels, although the project’s cost and technical parameters have been subject to revision over time.
The financial dispute became a major obstacle to moving the project forward. In June this year, a consensus was reached at a meeting chaired by Union Home Minister Amit Shah under which 90% of the water component would be funded through central assistance, with the remaining 10% shared by the participating states. It was also agreed that Himachal’s share of water would be allocated to Delhi and Rajasthan in return for those beneficiary states sharing the cost of Himachal’s portion of the power component.
That understanding was significant for Himachal, a state that has repeatedly raised concerns over the financial burden associated with hydropower projects despite the wider benefits generated from its rivers and natural resources.
Sukhu has portrayed the latest agreement as a departure from an arrangement he believes would have placed an unfair burden on the state. The chief minister has argued that if Himachal’s water and other natural resources are being used to serve the needs of several states, the state and its people should receive an appropriate economic return.
The political significance of the development is also evident. Sukhu has used the agreement to draw a contrast between his government’s approach and decisions taken by the previous BJP administration, arguing that earlier arrangements had left Himachal exposed to a large financial liability. His government, he said, chose to renegotiate rather than accept what it considered an unfavourable financial structure.
The broader importance of Kishau, however, extends beyond the Himachal government-versus-opposition debate. The project is part of a wider effort to strengthen water availability in the Upper Yamuna basin and increase regulated flows for downstream areas, including the national capital. The Centre has also described the project as an important step towards improving the flow and quality of water in the Yamuna.
For Himachal, the agreement could become particularly important at a time when the state is under considerable fiscal pressure. A recurring income stream from a major inter-state infrastructure project, without a corresponding large upfront financial burden, would offer the government greater room to support development and public spending.
At the same time, the financial benefit will ultimately depend on the final project structure, implementation, power generation and the obligations assumed by the participating states. The project also involves significant environmental, rehabilitation and land-related considerations. Official project details indicate that the planned reservoir would affect areas in both Himachal Pradesh and Uttarakhand and require the rehabilitation of thousands of people.
For Sukhu, however, the agreement represents something larger than a financial transaction. He has framed it as a test of whether a hill state rich in water and hydropower resources can negotiate a fairer share of the economic benefits generated from those resources.
The Kishau agreement therefore marks a potentially important moment in Himachal’s long-running debate over resource sharing. If the projected revenue materialises, the state could move from being primarily a contributor of natural resources to becoming a more significant financial beneficiary of a major inter-state project.
For a state that has long argued that its rivers should bring greater economic returns to its people, that could prove to be the most consequential aspect of the agreement.
