NBR to cut duty benefit on 21 power plant items

The National Board of Revenue (NBR) is going to cut duty-free benefit on import of 21 types of power plant equipments, categorising them 'locally available and consumable products.'

The decision has been taken in a bid to check duty evasion through abusing the benefit, offered for attracting power sector investment.

The NBR's Customs Wing has decided to scrap two existing Statutory Regulatory Orders (SROs) to frame a comprehensive order with a negative list for the duty benefit.

Officials said the NBR has sent a summary of the new SRO to the finance minister for his approval.

The products that might be included in the negative list are - steel sheet and steel pipe below certain grade, steel rod, cement, boulder stone, pre-fabricated building, electric light-fittings, transmission tower, cable except control cable, communication cable, optical fibre cable and power cable below 132 kv, distribution transformer, all types of paint and varnish, household goods, all types of chemicals, lubricating oil, transformer oil, office equipments and furniture, air conditioner below 2,00,000 BTU, dredger, anchor boat, and motor vehicles.

Currently, power producers enjoy duty-free benefit on import of power equipments and spare parts as per two SROs, issued in 1997 and 2000.

However, in a general order and an explanation issued in 2017 and 2019 respectively, the Customs Wing tagged some conditions on release of the duty-free power plant equipments.

Complexities arose on release of some equipments, as those conditions were not tagged through gazette notification or SROs.

Talking to the FE, a senior customs official said the NBR, through those two SROs, offered duty benefit in a 'wholesale' scale to facilitate power sector.

Abusing the facility, some of the power producers were importing pre-fabricated building, MS rod, boulder stone, hot rolled steel plate, steel structure, steel pipe, other construction materials, anchor boat, and dredger etc as power plant equipments.

In the SROs there was no list, mentioning which of the power plant equipments will be eligible to enjoy the duty-free benefit, he added.

Sources said although the SROs offered duty benefit for all types of power plant equipments, the NBR in a general order (GO) in February 2019 tagged a condition to check duty evasion.

In the GO, the NBR made obtaining approval or certification from the Ministry of Power, Energy and Mineral Recourses mandatory to avail the facility.

The GO also said customs houses will not release the power plant equipments, if they find any possibility of duty evasion through their import.

The customs official said in most of the cases, power sector investors come with the ministry's approval for all of the power equipments that they desire.

"We have found that a number of equipments are not directly used for power plants."

He also said a fresh SRO will be issued by merging the two existing SROs to resolve the existing confusion on releasing power plant equipments from the ports. The decision came following a report of the high-powered committee, comprising customs officials as well as representatives of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and the power sector investors. The NBR finalised the negative list following consent of the committee members, officials said.

The committee members visited 1,320 megawatts (MW) Rampal thermal coal-fired power plant project of Bangladesh-India Friendship Company Ltd, 1,320 MW Payra thermal power plant of Bangladesh-China Power Company Limited, Summit Meghnaghat 335 MW combined cycle power plant, and 100 MW heavy furnace oil engine-based power plant of Orion Power Limited.

Officials said both the SROs are nearly 20 years old, which need to be updated in line with existing investment situation.

However, the customs might allow some of the items from the negative list under special consideration following approval of BUET or other certifying authority, they added.

There was a dispute between power sector investors and customs authority over complexities on releasing power plant equipments under duty benefit.

Investors alleged that despite having certification of the Ministry of Power and Mineral Resources, the customs officials denied to release some of the equipments.

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