State government to reimburse VAT on purchase of diesel

Special Correspondent

To encourage industrial units to produce power through captive power plants

CHENNAI: The State government on Saturday announced a scheme of reimbursement on payment of value-added tax (VAT) for buying diesel to produce power through captive power plants during evening peak hours.

This is to encourage industrial units which should use their generators between 6 p.m. and 10 p.m. Chief Minister M. Karunanidhi has issued an order in this regard, according to an official release.

The reimbursement would be made through the Tamil Nadu Electricity Board, the release said.

As the industrial units had been advised not to draw power from the Board during the peak hours but to use their generators, the government held negotiations with oil companies to help the industry get diesel.

The Chief Minister wrote to the Union Minister for Petroleum Murli Deora in this regard and the Union government had advised the companies to make available the required quantity of diesel to the industry.

Stating that the cost of petrol came to about Rs.50 that included the VAT component, the release said the current price of diesel was Rs.37.13 per litre [after taking into account the subsidy].

Sources say after removing the VAT component, the price will come to about Rs.40.5 per litre. Arrangements have been made with Essar, a private oil company. The industrial units could buy diesel from the company and claim reimbursement from the TNEB by presenting vouchers.

The sources clarify that there will be no reimbursement for buying the fuel at a rate of Rs.37.13 per litre.

Asked about the response to the TNEB’s directive on peak hour restrictions for industrial units of the high tension category, the sources say the Board got relief to the tune of around 1,100 megawatt on Friday, the first day of the restriction regime. But, the demand went up steeply after 10 p.m. as the industry started drawing power from the Board.

As a result, the authorities resorted to load shedding to the tune of nearly 1,400 MW in the early hours (around 2 a.m.) of Saturday and 1,700 MW during morning peak hours (6 a.m.-9 a.m.).

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