The government has formally allowed power producers in special economic zones (SEZs) to sell electricity to outside customers by paying a customs duty of 16% of the sale price.
The commerce ministry has on Friday notified that power generating units in SEZs will be deemed to have the licence to distribute power from the day they get SEZ status. Finance minister Pranab Mukherjee has in Budget 2010-11 imposed a 16% customs duty on the sale of power by SEZ units to outside customers retrospectively from June 2009. The minister, however, exempted import of electrical energy other than from SEZ units from the customs duty. Therefore, some state run agencies that import power from neighboring countries will not be taxed.
FE had first reported the move on January 14 saying the finance ministry was planning to slap a customs duty of 16% on power sold by SEZ units to outside customers.
The move is expected to reduce the profit margins of groups like Reliance, Adani and Essar that produce power from SEZ units. RIL subsidiary Reliance Jamnagar Infrastructure Ltd, Adani group?s Mundra SEZ and Essar?s Hazira SEZ have power generation units. The government?s logic is that the surplus power generated by these units should be made available to outside customers starving for power, but there should be a level-playing field for power producers inside and outside SEZs.
