Govt collects Rs 2.5bn infrastructure tax from petro products

Kathmandu, October 21

The government has collected Rs 2.5 billion till date as infrastructure tax by selling petroleum products for the construction of Budhigandaki Hydroelectricity Project.

As per a provision introduced in the budget for fiscal year 2016-17, the government has been levying infrastructure tax of Rs five per litre at the customs point on the import of petrol, diesel, kerosene and aviation turbine fuel for the construction of the Budhigandaki Hydroelectricity Project. The construction of the project, as revealed

during the budget announcement, will begin from fiscal year 2017-18.

Through such arrangements, the budget has aimed to mobilise additional resources worth Rs seven billion for the construction of the 1,200-megawatt Budhigandaki project by the end of this fiscal year. The total construction cost of the project is estimated to be Rs 260 billion, according to the Detailed Project Report (DPR).

“Since the provision came into effect from mid-July, Rs 2.5 billion has been collected for construction of Budhigandaki Hydroelectricity Project from the import of petroleum products,” Nagendra Jha, director at Nepal Oil Corporation (NOC) said. “The collected revenue has been deposited in the government treasury as the tax is directly imposed at the customs offices.”

Though the budget has introduced the provision to levy infrastructure tax of Rs five per litre on the import of petroleum products, it has not mentioned till when this tax will be collected.

Meanwhile, the construction of Budhigandaki Hydroelectricity Project is in a limbo and there is no certainty that it will begin from next fiscal year as committed in the budget, because the government has made no progress in finalising the construction and operation modality of the project. As of now, only DPR has been finalised and the environment impact assessment (EIA) report of the project is yet to be approved by the Ministry of Science, Technology and Environment (MoSTE).

“Construction works cannot begin unless the financial closure of the project is done. Though the construction cost of the project, as per DPR, is Rs 260 billion, the government is yet to finalise the sources from where it will generate the amount and also the investing institutions,” Gopal Basnet, executive director of Budhigandaki Hydroelectricity Project Development Committee told The Himalayan Times. “The government should speed up the process to finalise investment and a concrete modality of operation and construction of the hydroelectricity project.”

According to Basnet, the committee will begin the construction of the 263-metre high-dam of this hydel project after the financial closure of the project is done and the operation modality is finalised.

It has been reportedly mentioned that the construction of the 1,200MW Budhigandaki Project will put an end to the energy crisis in the country.

Currently, the hydropower projects that have been in operation in the country have been able to generate only 785MW of electricity.