FinMin to convene meet on power gear duty on Feb 6

New Delhi: Amidst a raging debate on cheap import of power plant equipment, the Finance Ministry has convened a meeting of secretaries of concerned departments on February 6 to discuss changes in the present duty structure. “Department of Economic Affairs (DEA) Secretary R Gopalan is expected to chair the meeting, which would also be attended by secretaries of Power, Department of Heavy Industries and Department of Revenue,” the sources said.

With many private sector players such as Reliance Power (RPower) and Adani Power importing cheaper equipment at negligible or zero duty, especially from China, the domestic manufacturers like BHEL and L&T have been crying foul. The Power Ministry has sought 14 per cent import duty on the imported gear, while the Heavy Industries Ministry has thrown its weight behind the domestic players. However, the move to impose duty on imported equipment has been vigorously opposed by the private power companies.

At present, projects with less than 1,000 megawatt (MW) of generation capacity have to pay 5 per cent duty on equipment imports, while those above this limit enjoy duty-free imports. In a recent letter to Finance Minister Pranab Mukherjee, the Association of Power Producers (APP) said that there “does not appear to be any merit in increasing custom duties at this stage.” “Any step at this stage which increase the cost of power generation and leads to delays in capacity addition would be very detrimental to the power sector,” APP had said.

APP is a grouping of about 21 power firms, that account for over 95 per cent of private sector capacity. Last week, Minister of State for Power KC Venugopal had said that the government would take the right decision after examining the issue of import duty on power equipment. On January 18, top executives of private power companies held a meeting with Prime Minister Manmohan Singh, who assured them to address their grievances in a time-bound manner.PTI