Over-taxation pushes Petrobangla into debt-hole

Over-taxation has paralysed the state-owned Petrobangla, eating up a lion's share of its income and pushing it into debt to the National Board of Revenue (NBR).
Because of such high taxation, Petrobangla owes Tk. 22,000 crore to NBR. Najibur Rahman, chairman of NBR, yesterday said the board was going to take harsh steps against Petrobangla, to realise this money.
Petrobangla buys natural gas and natural-gas condensate from international oil companies (IOCs) operating in Bangladesh, at a rate fixed in the production sharing contract (PSC), and sells the gas at rate fixed by the Bangladesh Energy Regulatory Commission (BERC).

Under the contracts, Petrobangla is supposed to pay VAT and SD to the NBR, on behalf of the IOCs. Experts, however, have questioned the imposition of 55 per cent supplementary duty (SD) and VAT from the gas tariff.
From the gas tariff, the government collects 40 per cent as SD, 15 per cent as VAT, 11.22 per cent for Gas Development Fund (GDF), 26.29 per cent for Energy Security Fund, and 3 per cent as Advance Income Tax (AIT).
Officials from Petrobangla said that gas distribution, transmission and production companies get Tk. 840 crore out of their total income of Tk. 8,000 crore, which means Tk. 7,000 crore would go to the exchequer in the name of SD, VAT, AIT, GDF, and Energy Security Fund.
The government had planned to earn around Tk. 5,200 crore from this gas tariff hike, including SD, VAT and other duties. Of the amount, gas transmission, distribution and production companies would get around Tk. 1,000 crore, while the rest would go to the exchequer, on account of SD, VAT and other duties.
According to the NBR, the gas distribution companies had collected taxes from their clients, during 2009 to 2015, against services provided. But the companies did not deposit those taxes with the exchequer.
A Petrobangla official, who preferred anonymity, told The Independent that as a mother company of several distributors, Petrobangla has to pay the tax dues. But, owing to a misunderstanding of SRO (Statutory Regulatory Order) No-227, issued by the NBR in 1993, the taxes remained unpaid.
Petrobangla thought gas supply companies were exempted from taxes, from its understanding of the SRO. But the NBR claimed that only private companies like IOCs engaged locally in producing and selling gas, oil and petroleum products to the government, under agreement of partnership, were exempted from the taxes.
"So, the NBR said, we have to pay the taxes which were collected from the client," the Petrobangla official said. According to NBR, Titas Gas Company owes Tk. 10,988.67 crore from July 2009 to March 2015.
Bakhrabad Gas Company owes Tk. 672.45 crore from July 2009 to March 2014, Karnaphuli Gas Company owes Tk. 1,028.38 crore for the periods July 2009 to June 2011 and September 2011 to March 2014. Jalalabad Gas Company owes Tk. 348.63 crore, from July 2009 to March 2014.
Under the book adjustment method, the finance ministry has agreed take on the liability, to pay the tax dues to NBR. The government has decided to provide state-run Petrobangla with Tk. 1,000 crore in credit, to enable it to pay a part of the outstanding amount.
Officials from Finance Division said that Petrobangla was not in a position to pay the entire amount of outstanding money, as it runs on deficit, due to the high price it has to pay to the IOCs, for the gas sold by those companies under the production sharing contract.

Over-taxation pushes Petrobangla into debt-hole

Over-taxation has paralysed the state-owned Petrobangla, eating up a lions share of its income and pushing it into debt to the National Board of Revenue (NBR). Because of such high taxation, Petrobangla owes Tk. 22,000 crore to NBR. Najibur Rahman, chairman of NBR, yesterday said the board was going to take harsh steps against Petrobangla, to realise this money. Petrobangla buys natural gas and natural-gascondensate from international oil companies (IOCs) operating in Bangladesh, at a rate fixed in the production sharing contract (PSC), and sells the gas at rate fixed by the Bangladesh Energy Regulatory Commission (BERC). Under the contracts, Petrobangla is supposed to pay VAT and SD to the NBR, on behalf of the IOCs. Experts, however, have questioned the imposition of 55 per cent supplementary duty (SD) and VAT from the gas tariff. From the gas tariff, the government collects 40 per cent as SD, 15 per cent as VAT, 11.22 per cent for Gas Development Fund (GDF), 26.29 per cent for Energy Security Fund, and 3 per cent as Advance Income Tax (AIT). Officials from Petrobangla said that gas distribution, transmission and production companies get Tk. 840 crore out of their total income of Tk. 8,000 crore, which means Tk. 7,000 crore would go to the exchequer in the name of SD, VAT, AIT, GDF, and Energy Security Fund. The government had planned to earn around Tk. 5,200 crore from this gas tariff hike, including SD, VAT and other duties. Of the amount, gas transmission, distribution and production companies would get around Tk. 1,000 crore, while the rest would go to the exchequer, on account of SD, VAT and other duties. According to the NBR, the gas distribution companies had collected taxes from their clients, during 2009 to 2015, against services provided. But the companies did not deposit those taxes with the exchequer. A Petrobangla official, who preferred anonymity, told The Independent that as a mother company of several distributors, Petrobangla has to pay the tax dues. But, owing to a misunderstanding of SRO (Statutory Regulatory Order) No-227, issued by the NBR in 1993, the taxes remained unpaid. Petrobangla thought gas supply companies were exempted from taxes, from its understanding of the SRO. But the NBR claimed that only private companies like IOCs engaged locally in producing and selling gas, oil and petroleum products to the government, under agreement of partnership, were exempted from the taxes. So, the NBR said, we have to pay the taxes which were collected from the client, the Petrobangla official said. According to NBR, Titas Gas Company owes Tk. 10,988.67 crore from July 2009 to March 2015. Bakhrabad Gas Company owes Tk. 672.45 crore from July 2009 to March 2014, Karnaphuli Gas Company owes Tk. 1,028.38 crore for the periods July 2009 to June 2011 and September 2011 to March 2014. Jalalabad Gas Company owes Tk. 348.63 crore, from July 2009 to March 2014. Under the book adjustment method, the finance ministry has agreed take on the liability, to pay the tax dues to NBR. The government has decided to provide state-run Petrobangla with Tk. 1,000 crore in credit, to enable it to pay a part of the outstanding amount. Officials from Finance Division said that Petrobangla was not in a position to pay the entire amount of outstanding money, as it runs on deficit, due to the high price it has to pay to the IOCs, for the gas sold by those companies under the production sharing contract.