AP ready to battle huge income loss to cover up

Andhra Pradesh is mulling on a VAT rate cut for bailing out the gas-based private power producers in the state who are in doldrums. The government is planning to waive the 25% VAT imposed on natural gas and its allied products, including reclassified liquid natural gas (RLNG).

This decision of VAT cut is also necessary for the government to participate in the gas pooling scheme proposed by the Center. By participating in such a scheme, the state can get an allocation of only about 2 to 4 million units per day.

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There are a total of 3,300 mw gas-based power units in AP, they have been able to generate less than 600 mw daily during the last two years due to dwindling gas supplies in the Krishna-Godavari Basin. Despite these units not generating any power, the state is paying them a fixed cost. So with this move, government wants to help them so that they can cover up the losses and increase production.