HP Cabinet allows sale of JP projects, hikes VAT on diesel

Pratibha Chauhan & Kuldeep Chauhan

Tribune News Service

Shimla, June 30

The state Cabinet today paved the way for the sale of two hydro-power projects of 1,300 MW capacity in Kinnuar by Jai Prakash Power Ventures Ltd (JPVL) to Jindal Steel Works Energy Ltd and gave the nod for increasing VAT on diesel from 11.50 to 16 per cent, which will enhance its rate by almost Re 1 per litre.

The Cabinet, chaired by Chief Minister Virbhadra Singh, decided to allow the transfer of 1,000 MW Karchham Wangtoo and 300 MW Baspa-II hydro-electric power plants from JPVL to its subsidiary Himachal Baspa Power Company Ltd (HBPCL) and the sale of their securities to Jindal Steel Works Energy Ltd.

“The company would honour all pending liabilities, including the payment of the local area development authority (LADA) fund, which are being finalised. But the other terms and conditions remain the same, including the state’s 12 per cent free power share in these projects,” said SKBS Negi, Principal Secretary (Power).

Earlier, JPVL had planned a deal with Abu Dhabi National Energy Company Ltd (TAQA) to sell these projects in the range of Rs 11,500-Rs 12,500 crore, without seeking permission from the state government last year. But the deal never materialised.

With the increase in VAT on diesel, the state government hopes to get an additional income of Rs 50 crore annually. The decision has been taken not just to generate the much-needed revenue but to bring the VAT on diesel on a par with the neighbouring states of Punjab and Haryana.

Excise and Taxation Minister Prakash Chaudhary had hinted that Himachal would enhance the VAT on diesel to bring it on a par with other states. The VAT in Punjab, Haryana and Uttarakhand is already much higher than Himachal. It was on May 7-8 that a decision to work out a solution and have uniform petrol and diesel rates was taken by the Finance Ministers of the northern states in Thiruvananthapuram.