After a meeting of secretaries this week,the ministries of heavy industry and power have reimposed a 10 per cent import duty on all ultra mega power plant (UMPP) equipment which could increase the cost of power by as much as 1.5 per cent. As proposed by Planning Commission member Arun Maira,the two ministries will meet one final time to hash out details on providing exceptions for existing projects. Though those who support the move dub the tariff as a leveling of the playing field, the tariff will serve as a safeguard against Chinese competitors who have already received two equipment orders for the 4,000 mega watt project from Reliance Power,according to the Central Electricity Authority. Tatas UMPP in Mundra will also be furnished with imported equipment; theirs will come from South Korea. Commissioning of these projects is planned for the 12th plan,which means they are part of our long-term initiative to improve the countrys power situation, said a power ministry official. Projects so integral to our capacity addition should be coming from Indian companies. It should be a source of pride,and we must have the skills to do so. The power ministry had long been a staunch opponent to levelling the tariff because of concerns regarding existing UMPP orders. In the final meeting,the two sides agreed to exempt existing orders from the duty. However it remains unclear whether or not Reliance Powers Krishnapatnam order would be exempted since financial closure for the project was achieved earlier this month. The final meeting between the two sides will decide which projects will be immune from the 10 per cent duty. If I knew that the customs duty was not being enacted and I place orders,then the duty gets tabled by the time the equipment arrives in India,then the cost goes up, said a power ministry official. Once imposed,the decision would be a victory for Indias major power producers BHEL and L&T,who have been pining for level-playing field with their Chinese counterparts.
