At present, Nagaland has two major potential hydro-electric projects lined up, in Dikhu hydro project and the Tizu Zangki hydro project.

While the government of India was willing to set up the Dikhu project, the state power department was not willing to repeat the mistake it made with the Doyang hydro electric project (DHEP) in which the entire plant was taken over by the central government with a mere 12% royalty allotted to the state. Out of the 75 megawatt (MW) of electricity generated in the DHEP, Nagaland receives only 7 MW while the rest is distributed or sold.

“Even during times like Christmas when the state needs more power, the DHEP will not give us any preference” said an officer in the power department. He stressed the point on the need for the state to own its own power projects.

The state power department and the company have already negotiated a draft of the memorandum of understanding (MoU), which has been submitted to the state government for approval. As per the MoU, Nagaland government will procure the land from landowners and after the construction by the company, the state will initially receive royalty of 12% power generated for 10 years, which will be increased to 15% after 10 years. Besides this, Nagaland will get an additional 24% of power after the state has repaid its loan of 24% investment, which will result in the state getting 39% of the entire power generated from Dikhu project.

Nagaland will also have the first right for the purchase of power generated in the Dikhu project and after 40 years of operation, the entire project will be handed over to the state.

Nagaland government is all set to finalise the whole agreement with the Manu Energy Systems.

The central government has made offer of financing 90% of the project to the chief secretary of Nagaland. But the clause is that construction of the project should be given to North Eastern Electric Power Corporation (NEEPCO) or National Hydro Power Cooperation (NHPC).

An aerial survey which is essential to obtain the permission for the project has also been carried out by the Ministry of Environment and Forest in December 2008 and its approval is under process. The study of climate, rainfall is already in process at the site for the preparation of the detailed project report after which the hydro-electric project will officially begin. Procuring land for the project from the land owners is a tough job. Some elected members have been roped in to help reason with the people and it is even reported that some people are eager to sell their land. But according to officials from the power department, Nagaland government will go ahead with signing of the MoU early 2009 even if it is not able to tie up the issue of land acquisition.