Captive power generating industrial units will be relieved as the Madhya Pradesh government today abrogated the cess provisions in electricity bills. Industry had for long demanded the abolition of the cess, which is levied at 10 paise per unit on captive power generation. |
Earlier the state government had amended the cess provisions and had reduced it from 20 paise to 10 paise per unit in September 2005. A bill was cleared in the Assembly today. |
"The removal of the cess provisions will cost the state exchequer Rs 30 crore. Madhya Pradesh was the only state that levies cess on captive power generation. The amendment (second amendment to Madhya Pradesh Upkar Adhiniyam) to the Act will attract more investment to the state," Raghavji, state finance minister, told the Assembly. |
The cess imposed on captive power generation in Madhya Pradesh was the only one of its kind in the world. A number of industries had filed litigations against the decision of the previous Congress government to impose cess. |
The state industries generate more than 500 Mw of captive power. |
The previous Congress government had raised the cess on captive power from 4 paise to 20 paise per unit and electricity duty to 31 paise per unit thereby making captive power generation the highest in India. |
Ruling Bhartiya Janata Party carried on with the captive power generation cess and electricity duty imposed by the previous Congress government in a modified version. |
It introduced Madhya Pradesh Upkar (Samshodan) Adhiniyam 2004 (on 27 February 2004) to impose cess at 10 paise per unit on captive power generation. The Act was effective from 15 April 2004. |
So far each megawatt captive generation costs at least Rs 12,50,000 per year (as cess) in Madhya Pradesh. |
Despite captive power through diesel generator sets earn considerable revenue to the state in the form of entry tax and commercial tax on diesel, state government had ignored industry demands. None of the chambers of industries has reacted to the decision so far. |