August 28, 2008

20 year tax holiday for power projects likely in Pakistan

Daily Times reported that Pakistan government has decided to offer over 20 years tax holiday to attract private sector investment in building power houses worth billions of dollars on the proposed 5 big dams. They are
1) Diamer Basha Dam project – 4,500 MW
2) Kaklabagh Dam project – 3,600 MW
3) Munda Dam project – 600 MW
4) Kurram Tangi Dam project – 83 MW
5) Akhori Dam project – 600 MW

Official sources informed that the task force on 5 big dams has evaluated the options for the participation of private sector in the construction of dams. The task force was of the view that private sector would be willing to invest in power generation option and would make available much need finances for the expensive power houses.

Private sector would be offered investment opportunities on public private partnership on build operate and transfer basis. It added that formal announcement of tax holiday package is expected in the budget 2008-09. The investors would be exempted from income tax and are also expected to get exemptions from taxes and duties on their imports for the said power houses.

According to the initial estimates for the construction of five big dams, government needs USD 22 billion immediately. Multilateral financial institutions have already expressed their inability to finance such mega projects alone and had suggested the government of Pakistan to allow private sector to help government in this regard.