Govt to waive import duty on furnace oil
Thursday, 14 October 2010
FE Report
The revenue board has decided to waive duty on import of furnace oil in order to expedite the establishment of rental and peaking power plants now in the pipeline.
Currently imports of furnace oil attract 12 per cent customs duty and 15 per cent value added tax (VAT).
Officials said a bunch of power plants is expected to start power generation by March-April, 2011.
Recently, the government invited bids to install eight new furnace oil-run power plants with a capacity of generating 600 megawatt of power as the country is reeling under serious electricity shortage.
Revenue board officials said they will waive the tax on furnace oil only for power plants, not for general purpose or industrial use.
"The government wants to smooth supply of fuel in view of the current crisis. It considers furnace oil as an effective alternative of gas," said a senior tax official.
The National Board of Revenue (NBR) has sought detailed proposal from the power and energy ministry on the duty exemption, he said.
"We will waive the duty after getting a concrete proposal, which shows a compelling case," he said.
Officials said the government has also taken initiative to increase storage capacities of state-owned oil companies--Padma, Jamuna and Meghna.
The oil marketing firms will be able to store 50, 000 tonnes of furnace oil after raising their capacity, they said.
Officials said the government has decided to import 1, 80,000 tonnes of fuel by December.
Given the looming gas crisis, the government has emphasised on the use of furnace oil. Currently only four per cent power plants run on furnace oil.
Energy and Power Ministry, in a recent meeting on expediting rental, quick rental and peaking power plants, also underscored the need for withdrawal of duty on furnace oil.
In the meeting, Prime Minister's adviser on energy affairs Dr. Tawfiq-e-Elahi Chowdhury said captive power plants and boiler in factories can use furnace oil instead of gas.
The revenue board has decided to waive duty on import of furnace oil in order to expedite the establishment of rental and peaking power plants now in the pipeline.
Currently imports of furnace oil attract 12 per cent customs duty and 15 per cent value added tax (VAT).
Officials said a bunch of power plants is expected to start power generation by March-April, 2011.
Recently, the government invited bids to install eight new furnace oil-run power plants with a capacity of generating 600 megawatt of power as the country is reeling under serious electricity shortage.
Revenue board officials said they will waive the tax on furnace oil only for power plants, not for general purpose or industrial use.
"The government wants to smooth supply of fuel in view of the current crisis. It considers furnace oil as an effective alternative of gas," said a senior tax official.
The National Board of Revenue (NBR) has sought detailed proposal from the power and energy ministry on the duty exemption, he said.
"We will waive the duty after getting a concrete proposal, which shows a compelling case," he said.
Officials said the government has also taken initiative to increase storage capacities of state-owned oil companies--Padma, Jamuna and Meghna.
The oil marketing firms will be able to store 50, 000 tonnes of furnace oil after raising their capacity, they said.
Officials said the government has decided to import 1, 80,000 tonnes of fuel by December.
Given the looming gas crisis, the government has emphasised on the use of furnace oil. Currently only four per cent power plants run on furnace oil.
Energy and Power Ministry, in a recent meeting on expediting rental, quick rental and peaking power plants, also underscored the need for withdrawal of duty on furnace oil.
In the meeting, Prime Minister's adviser on energy affairs Dr. Tawfiq-e-Elahi Chowdhury said captive power plants and boiler in factories can use furnace oil instead of gas.