Uproar against move to tax captive power

Virtually the entire industrial sector in Karnataka is up against the state government's move to levy electricity tax on captive power generation.

Terming the move by the state to levy this tax as a rude shock, the Greater Mysore Chamber of Industry (GMCI) said: "The proposal to levy a tax of Rs 0.50 for every unit of captive generation is not justified for any reason. Further, the quantum of tax proposed is five times more than that being levied in a neighbouring state."

The association further said that this retrograde move will push Karnataka further backward, industrially as well as in the overall composite ranking. "The consequences of closed industries and unemployed workmen, whose numbers are swelling by the day, will only add more pressure to the State in future comapred to the small benefit it plans to derive by taxing captive generation," GMCI added.

This move by the state government comes at a time when it is facing an acute power shortage due to inadequate rains in the catchments of hydro stations. Karnataka has over 3000 mw of captive power generation, out of which 1000 mw has a capacity of more than 500 kw.

The industry association further said that in fact the state government themselves insisted earlier that one-third of power generation of industry's power requirement should be met through self-generation.

This move to levy tax on capitve power generation comes as a double whammy to the industry as the electricity tariff on HT industry has always been on the increase till a couple of years ago. "We have been bearing the brunt of cross subsidy, paying 1.6 to 1.8 times its real value. The industrial tariff at Rs 4.30 including duty, is one of the highest in the country and in the world," GMCI noted.