Private power producers protest import duty move

Private sector power producers such as Reliance Power, Tata Power, Essar Power, AES India, and Adani have strongly opposed the government's proposed move to levy 14 per cent customs duty on foreign power generation equipment. 

Ostensibly meant to give boost to domestic production, the duty will primarily act as a check on relatively inexpensive Chinese imports.

The proposal, if approved by the union cabinet, will help Indian equipment manufacturers like BHEL and Larsen & Toubro, but can turn out to be nightmare for companies like Reliance Power that are dependent on Chinese equipment for most of their capacity addition.

In a letter written to Prime Minister Manmohan Singh, the Association of Power Producers (APP), representing all the dozen or so major private sector power companies, has said imposition of customs duty will have serious implications on the cost structures and tariffs, and can seriously impact the capacity addition programme being planned by the private sector, besides resulting in further delays in commissioning of projects.

The move to impose the duty comes soon after the cross-border row over import of foreign telecom, which was blocked due to ostensible security concerns, was apparently resolved, with the government officially clearing such imports.

The private power companies say that such a ham-handed attempt to create a 'level playing field' will only further delay in filling the country's 12-per cent peak power deficit.