Steps to meet power sector fund crunch
The government has formed a high-powered committee to tackle a fund crisis in the power sector.
The government has also decided to continue tax breaks for the power plants that will come into operation after 2013.
The committee led by Finance Minister AMA Muhith will also examine various proposals of the power, energy and mineral resources ministry including that of imposing surcharge on mobile phone calls to build up an energy fund.
The committee was formed at a meeting with Prime Minister Sheikh Hasina in the chair at her office yesterday.
Secretaries of the finance ministry, energy division, power division and the National Board of Revenue will be the members of the committee.
The power and energy ministry in its proposal said 14 independent power plants have not been getting loans from banks as the banks are suffering from a liquidity crisis.
The power plants have also not been getting necessary loans from a Tk 1600 crore Bangladesh Infrastructure Finance Fund (BIFF), which was formed two years ago.
Muhith said the fund was created for all infrastructure projects and so far none from the power sector applied for the fund.
The power ministry proposed granting loans quickly from the BIFF.
The ministry also suggested the government issue directives to the Bangladesh Bank and commercial banks to give loans and open letters of credit (LCs) quickly in favour of the sponsors of the power plants.
The ministry placed a nine-point proposal for the power and energy sector at the meeting through a presentation.
It proposed imposition of surcharge on mobile phone calls at the rate of Tk 0.15 to 0.20 per call and a hike in gas prices to build up the energy fund.
The ministry recommended releasing a tax-free bond to finance the big power plants.
However, a senior official who attended the meeting said many of the power ministry proposals are complicated.
He said those proposals will be scrutinised further by the committee before taking a final decision.
The prime minister at the meeting issued directives to the authorities concerned to take necessary steps for speedy implementation of the ongoing power projects.
Another official who also attended the meeting said some sponsors are failing to implement the projects due to huge loads as a single entrepreneur was awarded many projects.
The premier asked the authorities concerned not to award too many power projects to a single company, according to officials.
UNB adds: For the independent power producer, it is needed to waive income tax, duty, VAT, supplementary tax and infrastructure development tax as the production cost of these plants will be higher, according to the meeting.
If the waiver is not given, the subsidy of the government will also increase. That is why the government has decided to implement the SRO of 1999 for the under-construction power plants.
In 1999, the government through a statutory regulatory order (SRO) gave the tax break facility for power plants for 15 years.
Later, through another SRO in the same year the tax holiday facility was limited for those plants that will begin power generation by 2013.
PM’s Press Secretary Abul Kalam Azad briefed reporters after the meeting.
He said the prime minister gave some specific decisions to ease the implementation of power generation projects.
The decisions include simplifying of LC opening for importing necessary equipment for power plants, continuation of a 15-year tax holiday facility and previous SRO on the issue.
The meeting also decided to fill the land of the proposed coal based power plant in Bagerhat through dredging the Pashur and Maidhora rivers.
Law Minister Barrister Shafique Ahmed, Water Resources Minister Ramesh Chandra Sen, Prime Minister’s advisers Tawfiq-e-Elahi Chowdhury and Mashiur Rahman, State Minister for Power, Energy and Mineral Resources Md Enamul Haque also attended the meeting along with the secretaries concerned.