Maha extends tax waivers to Dabhol Power up to March 2022
Maharashtra state Cabinet on Monday decided to extend the exemption to the Ratnagiri Gas & Power Pvt Ltd (RGPPL), formerly called Dabhol Power Company, in payment of Value Added Tax (VAT), Central Sales Tax (CST) and transmission charges for another five years effective from April 1, 2017.
The extension was necessitated as the exemption was applicable during 2015-16 and 2016-17 (up to March 31). RGPPL has received a relief of Rs 171 crore due to the waiver in last two fiscal years.
RGPPL owns the 1,967 megawatt (MW) power project, which wed since January 2014. It was revived by the Centre in March 2015 under the Power System Development Fund (PSDF) scheme. The company is currently generating 500 MW of power.
During November 26, 2015, and March 31, 2017, RGPPL supplied 500 MW of power to the Indian Railways at the per unit tariff of Rs 4 70. Of the 500 MW, RGPPL supplied 250 MW in Maharashtra. Subsequently, the Indian Railways and the Union power ministry had reached an agreement in November 2016 for the supply of 500 MW at Rs 5.50 per unit for the five-year period.
The state transmission company, the Maharashtra State Electricity Transmission Company (MahaTransco) has estimated that the extension of the waiver for five years will put an additional burden of Rs 373.24 crore on the state distribution and transmission companies while the government has projected an effective loss Rs 159 crore during the same period.
A state cabinet note scanned by this correspondent has noted that the state distribution company, the Maharashtra State Electricity Distribution Company (MahaVitaran) will have to forgo a total revenue of Rs 5,126 crore during 2017 and 2022 following RGPPL’s 500 MW supply to the high-paying Indian Railways. Further, MahaVitaran will have to impose an additional charge of 15 paise on its high tension industrial consumers to make up the loss.
However, the officer said the decision to exempt RGPPL from the payment of VAT, CST and transmission charges were taken in order to avoid the project from turning a non-performing asset (NPA). ”The state-run GAIL, which holds 25.51% equity in RGPPL, will provide 50% exemption in gas transportation and 100% in marketing margin. This will be worth Rs 300 crore. The project lenders will waive loan worth Rs 3,697 crore through cumulative redeemable preference shares while the interest rate on the balance Rs 1,900 crore will be reduced to 8% from the present level of 9.75%. This will help reduce the loan repayment amount by Rs 942 crore payable in 17 years,” the officer informed. This apart, the Centre will waive customs duty on import of gas which will be worth Rs 316 crore.