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The state industries department has drawn flak from the office of the Comptroller & Auditor General of India (CAG) for non-collection of Rs 257.29 crore towards electricity duty from three industries — Vedanta Aluminium Ltd (now Sesa Sterlite), Bhushan Power & Steel Ltd (BPSL) and Action Ispat & Power Ltd because of incorrect assessment of duty exemption criteria.
The exemption was granted under Industrial Policy Resolution (IPR), 2001.
The directorate of industries had recommended nine units of Vedanta Aluminium’s CPP near Jharsuguda, each of 135 Mw capacity, in four phases during 2009-13 for exemption of electricity duty (ED) for five years from the respective date of commissioning of each unit to the extent of captive use. The eligibility for exemption of ED for all the nine units had been determined on the basis of the date of the first fixed capital investment or the dates of making advance payment to the suppliers for purchase of plant and machinery for CPP.
“The expansion proposal towards enhancement of capacity of the aluminium plant including that of the CPP from 675 Mw to 1,350 Mw was submitted to Industrial Promotion & Investment Corporation of Odisha Ltd (Ipicol) on November 27, 2008 which was after the effective period of IPR 2001. Hence the expanded capacity was ineligible for incentive under IPR 2001 leading to incorrect electricity duty exemption of Rs 232 crore”, the central auditor mentioned in its draft report on ‘Implementation of Single Window Mechanism and Financial Incentives under IPR’. In case of BPSL, the directorate of industries had recommended exemption from payment of ED for the company’s six CPP units at Sambalpur for a total capacity of 376 Mw in four phases between June 2006 and October 2011.
However, BPSL had established 246 Mw of CPP capacity till September 2009. Audit observed that recommendation for 130 Mw additional unit for exemption of ED for which NOC (no objection certificate) from the Union ministry of environment & forests (MoEF) was obtained beyond the effective date of IPR 2001. The CAG has faulted the industries department for inappropriate determination of ED exemption in favour of BPSL, resulting in consequential loss of Rs 15.61 crore to the government exchequer.
Similarly, in case of Action Ispat- Jharsuguda, ED exemption was recommended for the commissioning of two units of its 37 Mw CPP (12 Mw+25 Mw) in two phases under IPR, 2001.
Audit scrutiny revealed that the 25 Mw CPP unit of the company was not eligible for ED exemption and hence, the inappropriate calculation of the duty benefited the company to the tune of Rs 9.68 crore.
