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ISLAMABAD: The Engineering Development Board (EDB), an arm of the Ministry of Industries and Production (MoI&P), has opposed the continuation of exemption in customs duty on the import of plant, machinery, equipment, spares and other capital goods, etc., for setting up and balancing, modernisation, rehabilitation and expansion (BMRE) of power units of 25-MW and above, without condition of local manufacturing.

This has officially been demanded by Almas Hyder, Chairman Board of the Engineering Development Board, in a letter to Secretary Power Division.

Under the Fifth Schedule to Customs Act 1969, an exemption from payment of Customs duty is provided on import of plant, machinery, equipment and other capital goods, spares etc., imported as plant for setting up and BMRE of power units of 25-MW and above, without condition of local manufacturing. Due to this exemption, number of machinery, equipment, etc., (transformers, switchgears, control panels, steel structures, cables etc.) manufactured locally are also being imported without duties & taxes, resultantly, hurting the local manufacturing industry.

According to Chairman EDB Board, exemption was provided in 2014 to attract investment in power sector with a view to overcome the electricity crises. But now, as per Indicative Generation Capacity Expansion Plan (IGCEP) 2022-31 the total installed generating capacity of electricity by 2022 was more than 41,000 MW, whereas, total demand in peak hours is around 25,000 MW to 28,000 MW and during winter falls to around 8,000 MW to 10,000 MW.

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He further highlighted that import figures of 2021 for potential power generation and transmission equipment was around $ 2.064 billion, adding that due to the concessionary import of plant and machinery, not only the import bill related to energy equipment is high but it is also damaging the local industry which is capable of producing the equipment, indigenously.

After explaining the case, Chairman EDB Board, in his letter has proposed that the exemption provided on import of locally made machinery, equipment and capital goods for setting up or BMRE of power units of 25 MW and above may now be subjected to the condition of local manufacturing with applicability of CG0- 04/2022. He contended that this would not only slash imports but would also create an encouraging environment for local industry.

He requested Power Division to consider his proposal, in order to achieve the goals of affordability, energy security and sustainability of electricity through indigenization in power generation sector, as envisaged under “National Electricity Policy’2021” and recommend to Ministry of Commerce/ FBR for deletion of following proviso under Fifth Schedule of Customs Act. 1969; “provided that the condition of ‘local manufacturing’ shall not be applicable on import of machinery, equipment and other capital goods imported as plant for setting up of a new power unit of 25-MW and above duly certified by Ministry of Water and Power in respect of those power projects which are on IPP mode meant for supply of electricity to national grid.”

Copyright Business Recorder, 2023

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