Home ›› 08 Jul 2022 ›› Front
Petrobangla has been unable to pay VAT and taxes for the past four years due to fund shortage, which has resulted in a Tk 22,997 crore debt to the National Board of Revenue (NBR).
According to the state-owned company, it’s fallen behind because it does not have enough money as its income is low, has an empty fund, imports expensive Liquefied Natural Gas (LNG) with subsidy, and incurs huge annual losses due to “so-called” system loss and corrupt officials.
Meanwhile, on June 29, the Large Taxpayers Unit (LTU), VAT of NBR sent a letter to the banks concerned to freeze the accounts of Petrobangla for not paying Tk 994.24 crore in VAT.
LTU VAT also directed the banks to transfer money from Petrobangla’s accounts, if there is any, to its account.
Even though the total debt is much higher than this, after hearings, discussions and audits, NBR had reached an agreement with Petrobangla under which the latter would pay Tk 994.24 crore, sources said.
But the state-run company still failed to pay that, forcing NBR to freeze its accounts.
Corrupt officials of Titas Gas Transmission and Distribution Company Limited are costing the government about Tk 4,000 crore per year as they cause artificial system loss by issuing illegal gas connections, according to the Bangladesh Energy Regulatory Commission (BERC).
These officials also charge absurd amounts of money — as high as Tk 1.5 lakh — from consumers for new but illegal connections and making away with it.
Petrobangla, also known as Bangladesh Oil, Gas and Mineral Corporation, is the country’s main authority that explores, produces, imports, transports, manages and sells all types of mineral resources through its entities and international oil companies. Titas operates under it.
According to Petrobangla, NBR charges 15 per cent VAT on LNG imports and another 15 per cent VAT during the transmission and distribution phase when LNG is fed to the national grid.
Petrobangla officials say the company has been unable to pay the VAT and other taxes to NBR as it’s been under huge financial pressure while importing LNG since 2018.
Since the company emptied its funds importing LNG, the Finance Ministry is now subsidising the import cost, they said.
Petrobangla running on fumes
Before this, LTU had also written to Petrobangla multiple times, asking it to pay the dues. According to the latest letter, Petrobangla had a total outstanding due of Tk 22,997 crore at the end of April of FY2021-22.
Petrobangla is not paying its dues even after getting multiple letters over the past few years, said an LTU official. “But NBR is now putting some pressure.”
Reached for comment, Petrobangla General Manager (Accounts) Nazrul Islam told The Business Post, “At present, we do not have enough money to pay the dues. We can’t raise money because of the high price of LNG.”
“We have repeatedly urged the Finance Ministry to make adjustments. The NBR chairman has also told us that he will look into it,” he added.
BERC Member Md Maqbul-E-Elahi Chowdhury told The Business Post that the worth of the amount of stolen gas being supplied through the illegal connections every year is more than what Petrobangla has to pay NBR in VAT and taxes annually.
“If Petrobangla at least managed to stop the gas theft and get that money, it would have been able to clear its dues right on time,” he stressed.
NBR Chairman Abu Hena Md Rahmatul Muneem and Petrobangla Chairman Nazmul Ahsan both were unavailable for comments.
The cost of ‘system loss’
Meanwhile, BERC Chairman Abdul Jalil blasted Petrobangla over its “incompetence and negligence” when it came to stopping the corruption of Titas officials and recovering the stolen gas and money.
The situation will not improve until the artificial system loss caused by the illegal gas connections is stopped and Petrobangla manages to recover the money, he added.
The system loss at the international level in terms of gas transmission and distribution is below 2 per cent while it is on average 10 per cent annually in Bangladesh.
Citing Petrobangla data, BERC recently said that the total system loss in FY2019-20 was 10.10 per cent — which means the country lost 100 billion cubic feet of gas that year.
In FY2020-21, Petrobangla also showed a system loss of 7.17 per cent.
While gas is currently sold at Tk 12.60 per cubic meter, the government lost about Tk 4,000 crore in FY2020-21.
The VAT on LNG conundrum
NBR’s VAT department officials said a huge revenue deficit is happening every year due to Petrobangla’s negligence and this issue needs to be resolved as soon as possible.
The Ministry of Power, Energy and Mineral Resources and the Finance Ministry will have to make the adjustments and decide on this together. NBR has nothing else to do, they said.
Energy expert Professor Shamsul Alam told The Business Post that consumers were forced to pay more for gas because NBR decided to charge a total of 30 per cent VAT on LNG from Petrobangla.
This amount of VAT is illegal, he claimed.
BERC officials also made a similar allegation. “We have repeatedly asked Petrobangla to resolve the issue. But due to its incompetence and negligence, the gas sector and consumers both are suffering,” said a member of the regulator.
However, Petrobangla’s Nazrul said the claim is incorrect. “At first, we thought the same but this has been imposed in line with the VAT Act.”
