concessional rate from the states govts. but once the power station is established then rates at which the water is given to us are substantially hiked. In MP, it was hiked to almost 100 times the rate we got when we started the project. We need a uniform policy which allows reasonable rates to be charged by the state govts.
Recommendations of Mr Wadhera, NTPC
Imposition of various duties and taxes by the states needs to be reviewed, considering the multiplier effect on the power tariff and economy. The benefit of customs duty exemption for mega power projects should be extended to all power projects for a limited period, may be 5/10 years till we are looking at major capacity additions in the country.
Deemed export benefit to domestic suppliers available to for mega power projects should be extended to all power projects it is important to state govts. need to be persuaded to exempt fuel (specially liquid fuel) for power plants from levy of sales tax, cess and royalties which are adding to the cost of generation.
State Governments need to be persuaded to exempt fuel for power plants from levy of sales tax, cess and royalties which are adding to the cost of generation.
All LNG terminals should be given a status of infrastructure project and thereby allow customs duty to be levied at the concessional rates
Liquefied Natural gas may be included in declared goods so that local sales tax is subjected to a ceiling of 4%.
Tax exemption on earnings of financial institutions from interest income from power projects could result in reduction in interest rates.
The power generating companies may be exempted from Income Tax. Alternatively, exemption under Section 195A of the Act may be considered to avoid tax on tax. Deemed export benefit is available to the Indian manufacturer only in a limited sense when they are importing raw material when the project is funded by World Bank or ADB. These benefits should be extended even if the project is not funded by World Bank and even if there is no actual export.
Mr. P.S. Bami added that mega power projects are exempted from customs duty. LNG terminals have no customs duty but if you want to put up a merchanting LNG station which will supply LNG to various consumers, customs duty has to be paid. For independent LNG it is 25% and LNG terminal for captive power is 5%. The excise duty is 16%. An independent LNG station which is not captive to a particular fertiliser or any power company, ultimately pays duty of 21.8%. Income tax is a pass through as it is recoverable from the consumer but is treated as an income and again taxed. The actual income tax comes to 8 paisa /KWH and the tax on tax is 5 paisa/