A hydropower company with Government of India-owned National Hydroelectric Power Corporation as one of its main partners has written to JK government seeking exemption from taxes and different other concessions for construction of power projects in the state.
The Chenab Valley Power Projects Pvt Limited (CVPPPL) - a joint venture between NHPC, PDC and Power Trading Corporation (PTC) - wants exemption from “all applicable taxes”, besides waiver of free power and water usage charges on the proposed 624-MW Kiru and 540-MW Kawar hydropower projects in Chenab Valley.

The state government has already extended all these concessions to 1000-MW Pakal Dul, also being allotted to the CVPPPL for construction.
A communication from Managing Director CVPPPL, MS Babu, to the PDC’s MD notes that the issue of the exemptions and the concessions for the two projects has already been requested in August 2016 and March 2017 respectively.
The Power Development Department, the administrative department for the PDC, had in February this year assured the company that the matter was under “consideration”.

“However formal sanction is awaited. The exemptions of taxes and waiver of free power and water usage charges is required to reduce project cost and its tariff so as to expedite PlB/investment approval of the project by government of India,” reads the letter by CVPPPL MD.
The company has also asked the state government to seek subordinate debt of Rs 1500 crore and Rs 2000 crore from union power ministry for Kiru and Kawar respectively for bringing down overall cost of projects and tariff rates. The government has already, on behalf of the CVPPPL, got the subordinate debt for Pakal Dul.
The CVPPPL was formed with 49 percent share each for NHPC and PDC and two percent share for PTC, to tap hydro potential of Chenab River. The memorandum of understanding and promoter’s agreement were signed in 2008 and 2010 respectively while as the company was incorporated in June 2011. As per the MoU, the PDC would have a share of not more than 49 percent while NHPC would have share of not less than 49 per cent in CVPPPL.
Initially the company was handed over the three projects, but in 2012 the state government later approved execution of 550-MW Dul Hasti-II by the CVPPPL.
In case of Pakal Dul, the letters mentions though the state government had already sanctioned exemption of work contract tax, entry tax and levy of toll tax vide SROs 128, 129, 130 in March 2017, the applicability of the goods and service tax has necessitated modification of the SROs.
A source said the government had “silently” exempted Pakal Dul from all taxes and acceded to all other demands of the CVPPPL for the project. Though no decision has been taken so far about fresh demands for Kiru and Kawar, the official said the government was likely to provide the concessions for the two projects as well.
The source said the CVPPPL has now written afresh to seek exemptions of various kinds under the GST regime as terms like work contract tax, entry tax, and toll tax doesn’t exists under the GST. The source however questioned the government’s “double policy”, asking why the exemptions were not being discussed for the PDC owned projects.
“The PDC is the state government’s own baby. Shouldn’t the government apply the same yardstick for its own power Corporation as well and provide exemptions to all its upcoming projects?” asked the source.
At present the PDC has 22 functional hydropower projects, small and large, with a cumulative capacity of 1211-MW. It is setting up another 11 new projects, but none of these projects have been provided these exemptions/concessions in more than three decade journey of the PDC. Only recently the government cleared the exemptions and concession for 93-MW New Ganderbal.
In fact the Pakal Dul, owned by the CVPPPL, which is nine year old company, was the first project to get tax exemptions and concessions. The company is however yet to start work on any of the projects. Of total 2100 MW power to be generated from three projects, J&K's share shall be 1200 MW and the State would have first right of refusal for remaining energy from the projects.

here is company details.

 

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