Financial bill cuts facilities announced in budget

    247

    KATHMANDU, July 23 : 

    Financial billThe government has cut incentives for the hydropower sector announced through the budget for fiscal year 2014/15. 

    Some incentives issued through the budget speech are missing from the Financial Bill 20131/14.

    The budget speech states hydropower projects, which start generation within fiscal year 2022/23, will enjoy 100 percent income tax exemption for ten years and 50 percent income tax exemption for the next five years. But the finance bill says only the project which starts between July 13 and August 23, 2014 will be entitled to such facility.

    Independent power developers have condemned the government move, saying that it would be impossible to start construction in such a small window.

    Similarly, Ashish Garg, executive member of Independent Power Producers Association, said the provision in the bill is confusing. “If the provision is implemented, projects that started before and after the window cannot claim the incentives even if they start generation before 2022/23,” he added.

    Keshav Dhwaj Adhikari admitted that some provisions have been changed in the financial bill. But they are impractical and need to be corrected, he added.

    Similarly, the provision of providing Rs 5 million per megawatt (MW) as grant to hydropower companies is also missing form the financial bill. Though the budget also says hydropower projects starting generation by 2017/18 are entitled to additional grant of Rs 1 million per MW, the provision is also missing from the financial bill.

    Adhikari told Republica that they had proposed to the finance ministry to provide incentives until the country meet its energy demand. “But the finance ministry inserted the timeframe for hydropower projects to enjoy the facility,” he added.

    The bill, however, has clarified the provision on VAT exemption and import tax discount on import of construction materials for hydropower projects. “Previously we were providing incentives by explaining the clause of Electricity Act. Now the bill clearly states that developers will enjoy the facility on import of construction materials if the required materials are not available in the country in sufficient volumes and sizes” Gokarna Raj Panth, information officer of Department of Electricity Development, said.

    To enjoy the facility, developers, however, are required to furnish proof that such items are not available in prescribed volume in the country. 

    The government charges one percent import tax on import of such materials. 

    Electricity Act sates that tax discount is applicable only for import of materials not available in the country.

    Source : Republica