7 Ultra Mega Power Projects and 106 Mega Power Projects Get Import Duty Relief

Seven Ultra Mega Power Projects and 106 mega power projects will not have to pay higher duty for importing equipment.

The Finance Ministry has notified a new duty structure that prescribes an effective duty of over 22 per cent, including education cess.

However, this new duty will not be imposed on ultra mega power projects, mega power projects and expansion of existing mega projects which had received certificate of approval from the Power Ministry till July 19, 2012, the date on which the Cabinet took the decision.

Power Secretary P. Umashankar says: “There is a list of projects given mega status or provisionally declared as a mega project. These will not be affected.

But any other project beyond this list will have to pay duty as per Government notification.”

Ultra Mega Power Projects to Remain Unaffected

Mundra (Tata Power)

Sasan (Reliance Power)

Krishnapattnam (Reliance Power)

Tilayaa (Reliance Power)

Surjuga (Yet to be awarded)

Bedabahal (Yet to be awarded)

Cheyyur (Yet to be awarded)

Import Duty

Basic Customs Duty 5%

Countervailing duty 12%

Special Additional Duty 4%

Total effective duty (including education cess) 22.85%

Exempted projects

The list of exempted projects includes 111 mega projects with permanent certificate and two with provisional ones. The provisional approval holders have been given three months to convert to permanent status, the official added. All these mega projects are expected to take care of capacity addition requirements up to the end of 12th Plan.

Earlier, power equipment for projects with capacity over 1,000 MW were exempt from basic Customs duty while those for projects with capacity of less than 1,000 MW attracted basic Customs duty of five per cent. This was done at a time when there was not enough capacity for ultra mega power projects (project with minimum capacity of 4,000 MW). Power producers such as NTPC and Tata Power say the imposition of the Customs duty will increase the project cost.

Capacity addition

A senior NTPC official said, “The equipment that we will buy for our future projects will be more expensive. There would be no change for the moment.’’

At the same time Tata Power said: “The easy import of equipment for power projects has been a large contributor to the capacity addition in the 11th Plan, with almost 50 per cent of additional coal-based capacities depending on imported equipment.

Added Customs duties will curb the import of superior technology products that are already high priced, thus, hindering the advancement of the sector.”

[Source: The Hindu Business Line dated 11 September 2012]