The Bangladesh Oil, Gas and Mineral Corporation, commonly known as Petrobangla, Bangladesh Petroleum Corporation (BPC) and the oil and gas distribution companies operating under them have racked up a staggering Tk 54,775 crore in debt to the National Board of Revenue (NBR), as they have been unable to pay taxes for many years due to fund crunch.
To remedy this situation, NBR in collaboration with its field offices organised a meeting, regarding the existing dues and how this outstanding debt will be paid, with Petrobangla, BPC and their distribution companies on Monday. NBR Chairman Abu Hena Md Rahmatul Muneem chaired the meeting.
At the meeting, both parties decided to clear all dues through book transfer payment. To resolve the outstanding dues, they will require the necessary allocation of funds from the finance ministry or book adjustment in favour of these companies, officials who attended the meeting told The Business Post.
If these dues are cleared, NBR’s revenue collection will jump by around Tk 55,000 crore, which will be a huge relief in meeting the International Monetary Fund’s (IMF) conditions for the upcoming fiscal year as the amount is over 75 per cent of the target set by the global lender.
To meet the IMF goal, the revenue board will have to collect Tk 4.005 lakh crore in FY2023-24, and Tk 4.729 lakh crore in FY2024-25, meaning an additional Tk 72,400 crore will be required to meet the global lender’s target in FY25.
Titas Gas Transmission and Distribution Company, Karnaphuli Gas Transmission and Distribution Company, Padma Oil Company Ltd, Meghna Petroleum Ltd, Jamuna Oil Company and Standard Asiatic Oil Company Ltd currently operate as distributor companies under Petrobangla and BPC.
Sylhet Gas Fields Limited, Bangladesh Gas Fields Company Limited, Jalalabad Gas Transmission and Distribution System Limited, Bakhrabad Gas Distribution Company Limited and several others also operate under these two.
The managing directors, CEOs and other representatives of these companies were present at Monday’s meeting.
Petrobangla, BPC and all the companies under them in total owe Tk 17,003 crore to customs, Tk 13,550 crore in income tax and Tk 24,221 crore in VAT to the NBR.
Earlier, Prime Minister Sheikh Hasina had ordered to clear all dues and necessary steps by the Energy and Mineral Resources Division (EMRD) and the Finance Division.
EMRD, on September 23, 2020, had made a request for the necessary allocation of funds in favour of Petrobangla, or payment through book adjustment under the recommendation of a DO letter previously issued by the NBR. But the Finance Division has taken no step yet, claimed Petrobangla officials.
Then, on April 24 this year, an inter-ministerial meeting, chaired by EMRD Secretary Md Nurul Alam, was held on book adjustment. Finance Division Secretary Md Khairuzzaman Mozumder and senior NBR officials were present at the meeting.
According to Petrobangla, it has fallen behind in tax payments because it does not have enough money as its income is low and the fund crunch is continuing, it imports expensive liquefied natural gas (LNG) with subsidies and incurs significant annual losses due to system loss and corrupt officials.
The NBR has repeatedly requested Petrobangla and other concerned companies to resolve this matter quickly, they added.
At its 38th meeting, the Parliamentary Standing Committee on Power, Energy and Mineral Resources Ministry was also informed about the necessary measures to settle all dues of Petrobangla and other companies to NBR on the price of gas sold by Petrobangla as per the decision taken at inter-ministerial meetings, said the state-owned company’s officials.
At a meeting on March 14, 2017, with the then finance minister in the chair, it was decided that the Finance Division would take necessary measures to clear the outstanding dues through book adjustment after the Office of the Comptroller and Auditor General completes its audit.
Officials at both ends, including those from NBR and EMRD, said that any discussion is still yet to see the light of day even after a notable meeting like that one.
Some corrupt officials of Titas Gas are costing the government around Tk 4,000 crore per year by citing artificial system losses and giving illegal gas connections, according to the Bangladesh Energy Regulatory Commission (BERC).
These officials also charge the consumers significant amounts of money – as high as Tk 1.5 lakh – for new but illegal connections, claimed BERC sources.
Petrobangla 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, while the BPC is an entity for importing, distributing and marketing oil and petroleum products.
VAT on LNG conundrum
Officials of the NBR’s VAT wing said that the country faces a huge revenue deficit every year due to Petrobangla’s negligence, and this issue needs to be resolved as soon as possible.
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 BERC member, requesting anonymity.
However, Petrobangla General Manager (financial management) Md Ghulam Murtuza told The Business Post, “NBR charges 15 per cent VAT on LNG imports and an additional 15 per cent VAT during the transmission and distribution phase when LNG is fed to the national grid.
“Dues have increased because we do not get the funds to pay the VAT at the import stage. But we clear all VAT at the distribution stage because we collect that from consumers.”
Regarding the issue, energy expert Prof Shamsul Alam told The Business Post that consumers were forced to pay more for gas because the NBR decided to charge a total of 30 per cent VAT on LNG from Petrobangla. “This amount of VAT is illegal.”
Officials say Petrobangla has failed to pay VAT and other taxes to NBR as it has been under huge financial pressure from importing LNG since 2018. Since the company emptied its funds by importing LNG, the finance ministry is now subsidising import costs.
