NEWDELHI: In a bid to cash in on the failure of state-owned Bharat Heavy Electrical Ltd to deliver equipment on schedule, private power producers have sought not to increase customs duty on imported equipment for power projects.
The Ministry of Heavy Industries in a note has acknowledged that BHEL’s manufacturing capacity for supply of main equipment and availability of commensurate erection and commissioning manpower has been a major concern. This has also raised concerns for timely implementation of the projects by BHEL.
The Association of Power Producers (APP) in a letter to Finance Minister Pranab Mukherjee has pleaded not to increase customs duty. Ashok Kurana, Director General of APP has pointed in a letter to Mukherjee; the domestic equipment manufacturers are already overburdened with existing orders and are not in a position to meet the demand of domestic power project developers.
The industry currently pays an implicit duty of 15-17 per cent on imported power equipment machinery. “This is against 14 per cent suggested by the Arun Maira Committee,” states Khurana in his letter, adding any further increase in the duty would directly impact the cost of producing power and it would be passed on to the consumer.
Seeking urgent attention of Finance Minister, the private power producers asked for removal of barriers to entry of power low cost equipment from China at all stages. APP also sought an optimal pricing and tax strategy to ensure that resource allocation can be done based on operating market forces, under credible regulatory regime.