Power projects can avail duty exemption before mega tag

To accelerate construction of power projects and bridge the widening energy deficit, the power ministry has allowed duty-exempted import of equipment by these developers on the basis of a provisional certificate.

According to the ministry’s revised guidelines, a provisional mega power project certificate would be considered where the developer has signed contracts with manufacturers for supply of equipment required for the project and paid not less than 10 per cent advance.

The developer could take delivery of the equipment within nine months from the date of provisional mega power certificate. However, the developer would have to submit attested copies of power purchase agreements (PPAs) at the earliest, but not later than 36 months of the date of provisional certificate, to the ministry.

Developers of 1,000-Mw coal-based power projects and 500-MW hydro projects are entitled to get exemption in customs and excise duties under the mega power project policy.

A developer granted provisional mega power status would have to furnish security in the form of a fixed deposit receipt from any scheduled bank for 36 months or more in the name of the President of India for an amount equal to the duty of Customs payable for such imports but for this exemption, as and when the goods arrive.

The ministry issued these guidelines last week. The power industry has been complaining of delays in signing PPAs, mandatory for getting the mega power developer status, according to the National Electricity Policy, 2005 and National Tariff Policy, 2006.