The Hindu Business Line : 11 power projects to lose naphtha duty exemption from next year

FROM the middle of next year, 11 power generation projects aggregating 3,700 MW will no longer enjoy duty-free import of naphtha to fuel their plants, according to the recently presented Union Budget.

Naphtha attracts a duty of 10 per cent customs duty and restoration of this levy will mean that power tariff will rise by around 15 paise per unit of power generated.

In several cases, naphtha is used as a backup or bridge fuel since there is inadequate supply of natural gas in the country. In others such as National Thermal Power Corporation's (NTPC) 350 MW Kayamkulam, the project runs entirely on naphtha.

The power generated from the all the projects is sold to State electricity boards.

The 11 projects that will no longer enjoy duty-free import of fuel from next year are the 120 MW Tamil Nadu Electricity Board-promoted Basin Bridge power project; 48 MW Reliance-promoted Goa project; 350 MW NTPC-promoted Kayamkulam project, 645 MW Kawas project, 430 MW Haryana project, 625 MW Auraiya project, 413 MW Anta project; 220 MW Tanir Bavi project; 165 MW BSES Ltd-promoted Eloor project in Kerala; 515 MW Essar-promoted Hazira project; and the 167 MW Gujarat Industrial Power Corporation Ltd project.

Earlier, the projects were asked to furnish a certificate to the effect that alternate fuels like gas were unavailable and hence the compulsion to use an expensive fuel like naphtha.

Upon submission of this certificate, the companies were allowed duty-free import of naphtha.

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