Ambiguity over duty concessions affect hydropower projects

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    KATHMANDU, Jan 20:

    Customs_DepartmentFrequent disruptions in customs clearance of equipment and construction materials in the absence of proper coordination among government agencies have hampered implementation of hydropower projects in different parts of the country.

    According to hydropower developers, the Department of Electricity Development (DoED) and Department of Customs (DoC) are at odds over providing concession on imports duty for such materials frequently.

    Though DoED has permitted hydropower projects to import the materials at one percent customs duty, the Department of Customs (DoC) has been denying the facility to the project developers. As a result equipment and construction material imported by such projects have remained stuck at Biratnagar and Birgunj customs.
    The DoC stopped providing the facility, stating that the Office of the Auditor General (OAG) has objected to the provision. The OAG has included different between normal duty and one percent customs duty as arrears in the name of DoC.

    Equipment and construction materials imported by Kabeli Corridor Transmission Line Project, Upper Mai Hydropower Project and Thosnekhola Hydropower Project have been stuck at Birgunj and Biratnagar customs for the past three weeks.

    Developers can release the equipment and construction materials from the customs only after making commitment to pay full import duty if the government declares such materials ineligible for reduced duty rates.

    Toyam Raya, deputy director general of DoC, said the department started levying normal duty on such materials after OAG objected to the facility.
    The OAG directed DoC to levy normal duty on such materials after some companies lodged complaints with the office, arguing that some of the imported materials, such as transformers and wires, could be produced within the country.

    However, DoED officials say that they prepare ´master list´ – a specification of products not available in the country – after issuing public notice and offering domestic companies adequate time to report if they can produce such products in the country. “Though some companies produce some of the items included in the list, their production volume is very low,” said Gokarna Raj Pantha, spokesperson of DoED.

    Subarna Das Shrestha, former president of Independent Power Producers´ Association Nepal (IPPAN), said the obstruction in import of equipment and construction materials was not only delaying the project but also driving up development cost.

    The construction of Kabeli Corridor Transmission Line started only recently. Similarly, Upper Mai Khola, Mai Khola Hydropower and Kabeli Hydropower Project are at different stages of development. If the transmission line project is not completed in time, power generated by these three projects won´t be connected to the national grid.

    Voicing objection over similar problem in December last year, a delegation of hydropower developers had approached the Ministry of Energy and the Office of Prime Minister and the Council of Ministers (OPMCM). The DoC had released equipment and construction materials stuck at different customs points following intervention from the top authority.

    Source : Republica