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Imported power equip to cost 9% more

Date: 20-07-2012
Subject: Imported power equip to cost 9% more
The Union Cabinet on Thursday imposed a 21% duty on imports of power equipment in a bid to provide local players such as state-owned Bharat Heavy Electricals (BHEL) and Larsen & Toubro (L&T) a level playing field against the Chinese.

This will have three components --- a 12% countervailing duty, or CVD, a 5% import duty and a 4% special additional duty.
At present, equipment imported for projects of less than 1,000 mw capacity attract 5% customs duty, while those above that enjoy exemption.

The power ministry had sought a higher duty to tackle the cheap Chinese boiler-turbine-generator imports.

But while domestic manufacturers hailed the move, power generation companies were not impressed as they felt the cost of power generation would increase.

“It will increase the cost of power. The government has only gone by the protection of domestic equipment makers. They have not really addressed the concerns of private power generation companies,” said Ashok Khurana, director general of the Association of Power Producers.

He said the impact would be 8-10 paise per unit for new projects.
But M S Unnikrishnan, managing director of Thermax, a power equipment manufacturer, said the impact would be much lower. “The duty will increase the cost of power by just 3.5 paise per unit for power produced with imported equipment.”

He, however, said the actual benefit for domestic manufacturers is just 9% as the CVD is nothing but the 12% excise duty being paid by domestic players now.

SAIL divestment gets nod
Reviving the much-hyped divestment process, the Union Cabinet on Thursday also approved a 10.82% stake sale in public sector Steel Authority of India (SAIL).

The government currently holds 85.82% stake in the company.
The divestment is expected to yield over Rs4,000 crore to the central exchequer. However, it will not involve any sale of equity by the company and hence will not bring in any funds into SAIL.

CS Verma, chairman and managing director of SAIL, refused to comment on the time, mode or other details, saying “I have not seen the minutes of the meeting.”

Analysts said much would depend on the timing of the follow-on offer.

The government aims to raise Rs30,000 crore through divestments this fiscal to bring down the fiscal deficit, which weighed in at a whopping 5.9% last fiscal.

VSNL land demerger okayed
Ten years after the controversial Tata-VSNL surplus land dispute case began, the government approved the demerger of surplus VSNL land into a separate company.

The land, which is expected to fetch the exchequer Rs6,150 crore, will be sold off through a special purpose vehicle (SPV) called Hemisphere Properties (HPIL), which was formed through a Cabinet decision in 2005.

In fact, the Cabinet had then proposed that the government will have to buy a 51.12% stake in the SPV to facilitate the sale process. The remaining shares will be sold to a joint venture partner who might develop the real estate.

The surplus land, held by the erstwhile PSU, VSNL, is to the tune of 773.13 acre, spread over five locations, including Delhi, Chennai and Pune.

In an interview with DNA in April, Vinod Kumar, CEO & MD, Tata Communications, said: “Tata Communications is custodian of the land, and we will simply hand the land over and not derive any benefit from the hive off or use of the surplus land. Our involvement will have no impact on the decision taken by the government.”

Forward contracts Bill deferred
The government once again deferred consideration of the Forward Contract Regulation Act (Amendment) Bill, which seeks to amend an existing Act to give more powers to Forward Markets Commission, the commodity market regulator. The Cabinet had deferred the Bill last week, too, as Trinamool Congress, a UPA constituent, had opposed it.

Source : dnaindia.com

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