Ministry of Finance reduces Customs duty on electricity generated and supplied: Adani Power to gain up to Rs 1 cr/day

With the Union Ministry of Finance reducing Customs duty on electricity generated and supplied from an SEZ into a Domestic Tariff Area (DTA) or non-processing areas of an SEZ, Adani Power Ltd (APL) is expected to gain up to Rs 1 crore/day.

APL is setting up 4,620 MW power capacity at Mundra SEZ, out of which 990 MW is operational. With the Customs duty sop, it is expected to gain between Rs 75 lakh and Rs 1 crore a day. By January 2011, when the company expects to generate a total of 1,980 MW at Mundra, the gain would also double, sources familiar with the development said here on Tuesday.

Since APL is, perhaps, the only company to commercially sell electricity from an SEZ, it is also possibly the only beneficiary of this sop in the country. The Ministry had, through a notification yesterday, announced a Customs duty reduction from 16 per cent ad valorem – about 50 paise a kilo-Watt hour (kWh) to nearly 10 paise . That is, APL will now be paying only 10 paise a unit as customs duty, instead of 50 paise, for the electricity sold at the average price of Rs 3/unit.

The Budget levied 16 per cent Customs duty on the supply of power from an SEZ to DTA. APL had, sources said, obtained an injunction against this levy from the Gujarat High Court. With this notification, APL, which is using imported coal for power generation, will end up paying only 10 paise a unit as duty and will thus gain 40 paise for every unit it sold. APL is now selling about 20 million units of power a day, which is expected to double before the end of this fiscal.