ISLAMABAD: The Islamabad Electric Supply Co Ltd (IESCO) has requested the federal government to exempt or reduce the ADB-funded Advanced Metering Infrastructure (AMI) project from taxes and duties.
Sources in the government told Pakistan Today that IESCO has written a letter with regard to the request for exemption, reduction of taxes and duties on the AMI pilot project.
It is pertinent to mention here that IESCO awarded the AMI project to M/s KT Kaifa consortium on Sep 1, 2022. The project was previously halted in September 2019 due to a controversial bidding process to award the contract to a sole bidder.
Sources said that the notification of proof of concept was issued to the contractor for installing 500 meters with the allied system on a smaller scale within the stipulated time on its own cost to demonstrate and establish the consortium’s ability to know the main AMI project.
During the import of equipment in PoC, the bidder has paid applicable taxes and duties on different import items to the customs authorities for clearance of imported items. Presently, 20% customs duty, 17% sales tax, 6% additional customs duty, 5.50% income tax and 9% regulatory duty are imposed on the import of equipment related to this project.
On the other side, all the local Electricity Meters Manufacturers of Pakistan wrote grievances to the government’s high power authorities for this illegal award of contracts without considering the “Land of Law of Pakistan”.
The local Electricity Meters Manufacturers are protesting the IESCO seeking illegal exceptions from applicable taxes and customs duties to support its blue-eyed company of AMI project which they say will destroy the local engineering industries that are producing smart meters locally.
The local Electricity Meters Manufacturers are paying all the applicable taxes and duties on the import of electronic items which are used in the manufacturing of smart meters and the government never granted any exemption to local smart meter manufacturers.
Sources added that it was clearly mentioned in the bidding document of the IESCO AMI project that if the smart meters are manufactured locally, the bidder is supposed to be responsible for all the applications of local taxes. Whereas IESCO is seeking the exemption after the award of the contract was not a level playing field for the local industry to compete in the bidding process and have a serious violation of land law and unlawful.
Sources said that IESCO will pay all taxes and duties on import items in the project from counterpart funding as per contract agreement and ADB loan conditions which will create a huge financial impact on utility and may also lead to hold remittances of CPPA (G) for prompt payments.
It is worth mentioning here that ECNEC had approved ADB-PDEIP II Tranche-AMI project-IESCO Package 1 on November 7, 2016, following which the loan and project agreement were signed between ADB IESCO and MoE on Nov 19, 2016.
The project has faced massive delays due to the pandemic COVID 19, legal issues and re-evaluation of IESCO BoD, CCoE and CDWP/ECNEC. Subsequently, the project was finally re-approved by ECNEC on 24/11/2019 with the following directions that Power Division will implement the project in IESCO as a pilot project to evaluate all the issues such as design, technology, scope. On the basis of lessons learnt, AMI projects of other DISCOs, including LSSCO will be implemented.
Accordingly, the procurement process resumed and a contractor M/s KT- Kaifa consortium remained as the sole qualified bidder in the bidding process.
