India's NHPC asked to pay 8% on power sales from Myanmar hydro plants

Myanmar has wants India's NHPC to pay an 8 percent tax on income from power sales from the date of commissioning of the first of its two hydropower projects in Myanmar, after an exemption period of three years is over.

The two projects are the 1,200 MW Tamanthi hydroelectric project 660MW Shwezaya hydroelectric project.

However, the government of Myanmar has also kept the provision for negotiation, as per which, NHPC has already placed a demand for full exemption from payment of any kind of tax, commercial, custom, or income tax, for the whole life of the project, i.e. thirty five years. The approval, however, is still pending.

Moreover, the Myanmar government has proposed 10-15 percent free equity and 10-15 percent free power, with a total not less than 25 percent and a minimum of 10 percent each, for free equity and free power.

In this direction, NHPC has demanded reduction in free demand and free equity from 25 percent to 12 percent.

Lastly, the government has pointed out that in light of the high project costs projected for both the projects, and under the conditions of provision of free power, payment of consultancy charges to the local partner firm - International Group of Entrepreneurs Co. Ltd. - ranging between 3-7 percent, in the absence of financial subsidy from the Government of India, the rate of tariff was not likely to be lesser than Rs 7 per unit.