Power sector advised to use locally made equipment
Foreign investors in the mainland's power sector should use local equipment and will pay import duties and VAT on imported equipment, Minister of Electric Power Shi Dazhen said yesterday.
The mainland has promised to restore duty-free status to imports of certain capital equipment, especially for large-scale projects and those involving high technology. Detailed regulations are expected to be published next year.
In April last year, Beijing abolished the privilege of foreign investors importing capital equipment duty-free.
But, following a slowdown in growth of inward investment, it recently announced it would allow a partial re-introduction of the privilege.
Mr Shi said that, if a foreign investor imported equipment for a power project, he would have to pay import duty and VAT.
It would be advisable for a foreign investor to buy locally produced equipment so the product would have a lower cost and lower tariff of electricity to the grid and the customers, Mr Shi said.
That way, the project could be easily approved.
He said the most important issue for the end-user was the tariff.
If the tariff could be at a competitive level, those products would be welcome. If the final tariff sold to the grid was high, that project might not approved.
Officials said investors - foreign and domestic - would probably be allowed to import tax-free power equipment that China could not produce, but import tariffs were likely to be maintained on categories of equipment that China could make.
They said that, in the second case, the investor would decide between the cheaper Chinese equipment and more expensive foreign equipment.