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Import duty on power equipments to make electricity costlier

Reports state that private power producers and domestic equipment makers are at loggerheads over the proposed duty on imported equipment.

After players like BHEL and L&T pitched for a levy on import of power equipment, especially from China, local power producers, including Reliance, TATAs and Essar, have approached Finance Minister Pranab Mukherjee, saying such a duty would make electricity costlier for consumers.

To provide a level playing field for domestic power equipment makers such as BHEL and L&T, especially against Chinese entities, the government is actively looking at imposing an import duty of 14% on gear imports.

Countering the move, the Association of Power Producers in a letter to the Finance Minister has said that imposition of any such would not benefit the power sector or consumers but "two/three domestic suppliers".

Mr Ashok Khurana APP director general said in the letter that "The power sector in the country is passing through a very challenging phase with significant headwinds in the form of fuel (coal and gas) supply constraints, financing issues and pressures because of poor financial health of distribution companies.”

He has pointed out that import duty would add to the capital cost of a power plant and make power costlier for end-consumers.

Similar letters have also been sent to Planning Commission Deputy Chairman Montek Singh Ahluwalia, Planning Commission Member B K Chaturvedi and Power Secretary P Uma Shankar.

APP is a grouping of around 14 independent power producers, whose generation portfolio is about 120,000 MW. Besides, Reliance, TATA and Essar, other members include Adani Power, GVK, Lanco and GMR.