Private Power producers in the country
fear that power tariffs may go up by Rs 0.50 a unit if the Government decides
to impose special duty on imported equipment.
The Government proposes to levy
Customs duty on import of power equipment with more than 1,000 megawatt
capacity. There is speculation that the Cabinet Committee on Economic Affairs
will consider the proposal this week.
Opposing the move, they have
written to the Prime Minister and other senior Ministers, under the aegis of
the Association of Power Producers, saying this will not only result in
increased tariffs but will also delay capacity addition.
“Given the high import duty of
over 20 per cent, and with rupee depreciation against all major currencies, the
power tariff from all generation projects will go up by 30-35 paise a unit. At
the consumer level, this will translate into an increase in prices by over 50
paise a unit,” they argue.
At present, power generation
equipment for projects below 1,000 MW bears a duty of 5 per cent while there is
nil duty on equipment for projects over 1,000 MW. The Arun Maira Committee had
favoured a duty of 14 per cent, while a Committee of Secretaries recommended 19
per cent for larger projects.
The duty hike is being considered
to help domestic equipment manufacturers. But the power producers say that
domestic manufacturers are already burdened with a huge order-book, putting a
severe constraint on their ability to supply within a given period.
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