India seeks waiver of AIT on Rampal plant, imported equipment
Rezaul Karim | Sunday, 12 June 2016
India has sought waiver of advance income tax (AIT) on the plant and equipment being imported for 1,320-megawatt coal-fired power plant at Rampal in Bagerhat, officials said.
The neighbouring country has also sought exemption from purchasing any insurance/re-insurance for the project, they added.
Indian power company, Bharat Heavy Electricals Limited (BHEL), has been selected to build the coal-fired power plant.
Indian High Commissioner Harsh Vardhan Shringla has recently sent a letter to the Prime Minister's Office (PMO), seeking an exemption.
"You are aware of recent discussions regarding vetting of the contract to be signed between Bangladesh-India Friendship Power Company Limited (BIFPCL) and Indian BHEL for EPC (Engineering Procurement and Construction) for the Rampal project," the high commissioner said in the letter.
"The waiver of AIT on the plant and equipment being imported for the project from EPC contractor's bill and also the exemption for BIFPCL and its contractors from purchasing any insurance or re-insurance for the project from Sadharan Bima Corporation or any other insurance company in Bangladesh," according to the letter.
BIFPCL is now preparing for signing of the EPC contract with BHEL which is expected to take place in next month, said a source concerned who is familiar with the developments.
The PMO has asked the finance ministry to take necessary steps for waiving AIT at source on permanent imported items by EPC contractor BHEL for implementing the coal-fired Rampal power project, he said.
It has also asked the ministry to take appropriate action to exempt BIFPCL and its contractors from purchasing any insurance and re-insurance, he mentioned.
BHEL would have to arrange the funds from Indian Exim Bank on behalf of BIFPCL. Of the total, $ 1.39 billion will be in foreign currency and another $ 101 million in local currency.
BIFPCL will fund 30 per cent of the project cost and the rest will come in a form of loans.
The proposed power plant will need 3.2 million tonnes of coal a year.
The site selected for the coal-fired power plant drew flak from various quarters in the country.