The Karachi Electric Supply Corporation (KESC) is likely to be granted exemption from customs duty on temporary import of power generation plants, despite the fact that it is now a private entity, sources in Ministry of Water and Power told Business Recorder.
The proposal will be considered by the Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on Tuesday. The Ministry has pleaded that as Water and Power Development Authority (Wapda) and Pakistan Electric Power Company (Pepco) had been granted exemption from customs duty on import of plants, KESC should also be given the same incentive, sources added.
The main purpose of this proposal is to facilitate KESC's new management to install new generating capacity to address power shortage in Karachi. In this connection, the Ministry has claimed that a new 220 mw fast track power plant at Korangi was under commission and would be completed by April, 2009. Moreover, a contract has been signed for a further 560 MW combined cycle project at Bin Qasim to be commissioned in 2010-11 on fast track basis, sources said.
Karachi is currently in the throes of an acute power crisis. KESC, in an attempt to resolve the crisis on an emergency basis, was bringing in rental power plants. The shipment of first rental power generation plant of 50 mw reached Karachi in the last week of October, 2008.
The Federal Board of Revenue(FBR), with the approval of the ECC, had issued SRO 565(1) 2008 on June 11, 2008, allowing exemption from customs duty on temporary import of rental power generation plants to overcome the energy crisis in the country to Wapda and Pepco through its generation companies. However, this concession had not been granted to the KESC.
Sources said that the Ministry of Water and Power had approached FBR to allow similar tax relief to KESC, as applicable in the case of Wapda and Pepco. The tax collecting agency agreed to the proposal, with the suggestion that a summary be moved to the ECC for formal approval.
"As a precedent of the ECC decision and keeping in view acute power shortage in Karachi, the KESC may be allowed exemption from customs duty on temporary import of power generation plants from the same date as was given to Wapda and Pepco," sources quoted Secretary, Water and Power as having recommended to the ECC. KESC Chief Executive Officer (CEO) Naveed Ismail and MD Private Power Infrastructure Board (PPIB) Fayyaz Elahi were locked horns over the selection of sites for new rental power projects to be established in Karachi.
The main reason behind the differences is the barge-mounted power plant of 248.95 mw to be installed by a firm, Karkey, for which no site has been finalised yet. The Cabinet had approved two packages ie Package-A of 1000 mw proposed from IPPs within Pepco jurisdiction, whereas package-B was based on rental power plants. Initially, it had been proposed that 200 mw should be arranged through rental and barge-mounted plants near Karachi but later on it was increased to 500 mw.
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