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Captive power producers in Rajasthan stand together against duty hike 

Saur Energy , Jul 19, 2019

Rattled by the Rajasthan government’s decision to hike electricity duty on captive power by 150 percent, representatives from energy-intensive sectors like cement, textile, mining, etc have come together in knocking on the doors of various government departments, including the Chief Minister’s Office to get relief from the stiff proposal.

If not rolled back, the duty hike from 40 paise/unit to Rs 1, which perhaps is the highest in the country, would not only strain them with an annual additional burden of Rs 500 crore but put the operational competitiveness of many companies at a serious disadvantage, said the industry.

A delegation of Rajasthan Textile Mills Association (RTMA) met principal secretary to chief minister Kuldeep Ranka and urged him to take up the rollback request at the appropriate level. Similarly, the cement industry is trying to meet all the relevant authorities, while the bigger companies are out making rounds of various departments individually.

“The textile units had expected relief from the high level of tariffs. Instead, the government has announced to increase the duty. In fact, states like Maharashtra, Gujarat, Telangana, and Andhra Pradesh are giving Rs 2 tariff subsidy to the textile industry. The costly power will raise the financial burden on the mills and we will be uncompetitive both in the domestic and international market,” said Ashok Kumar Jain, secretary of RTMA.

Atul Sharma, head of FICCI-Rajasthan, told the local news that the plants in Rajasthan, in any case, face several other locational disadvantages both for sourcing raw materials and marketing finished products. “The distance on both counts adds to the cost. Unless there is some relief, margins will get eroded and there will be less incentive for new industries to look at Rajasthan as an investment destination,” he added.

Electricity duty on captive power remained exempted since 2006. But in 2015, the then BJP government had imposed Rs 40 paise per unit. With the additional duty, the cumulative duty outgo will surge to Rs 800 crore, as per the estimates of the industry.