NBR toughens up on power plants

The National Board of Revenue (NBR) has tightened the rules regarding duty-free import power plant equipment in a bid to curb abuse of the privilege through import of materials not directly related to power plant construction.

The revenue administration listed 20 items -- including steel sheet, rod, cement, household goods, office furniture, dredger, anchor boat and vehicles -- that are outside the purview of zero-duty import benefit for power plants, according to a notification issued at the end of last week.

The list comes based on a recommendation from a panel formed by the NBR last year as items as random as dredger, boulders, steel sheets and pipes were imported duty-free in the name of power plant construction.

This gave rise to fears of revenue loss among customs officials.

Subsequently, the revenue authority has decided to barricade items unrelated to power generation from the exemption benefit.

Since 1997 the customs authority has been offering the privilege to public and private power producing companies to import machinery, spare parts and materials needed for erecting the plants.

However, no specific list of products was mentioned in the notification.

And in the absence of clarity, products not directly related to power plants were being imported by firms based on recommendations from the Power Division.

"The new rules have already become effect," said a senior official of the NBR on condition of anonymity as he is not authorised to speak with the media.

And apart from the restriction of import items not directly connected to power plant materials, the NBR has also eased rules to facilitate speedy release of machinery and equipment related to power plants, he added.

In the notification, the revenue authority cancelled previous orders regarding tariff privilege for bringing in power plant equipment from abroad and slapped the new conditions.

Public and private companies will have to import plant and equipment before commercial production of electricity begins and notify the power division and customs about the commencement of power generation.

Once commercial production starts, power plant operators can import spare parts worth up to 10 per cent of their import value duty-free for up to 12 years.

Erection materials, machinery and spare parts that are imported on a temporary basis should be returned abroad within six months of start of commercial production.

And temporarily imported materials cannot be sold, rented or handed over without payment of import tariff and taxes, the notification added.

With a total generation capacity of 22,787 megawatts, Bangladesh now has 137 power plants and six of them have been put out to pasture.

Another 50 plants are under-construction, according to the latest annual report of the power division

The government is building 16 of them, whose combined generation capacity would be 8,745MW.

Private sector players are building the other 34, whose total generation capacity would be 6,404MW.