M AZIZUR RAHMAN:
Petrobangla has sought fiscal support worth around Tk 23 billion to foot ballooning bills, including purchase of LNG (liquefied natural gas) during the first half of the current fiscal year.
The state-run oil and gas corporation sent a proposal to the ministry of finance last week through the Ministry of Power, Energy and Mineral Resources (MPEMR) for the budget allocation, a senior energy ministry official told the FE on Tuesday.
It received around Tk 25 billion as fiscal support from the government in FY 2020.
During July-December of the current fiscal, Petrobangla imported only one spot LNG cargo apart from some 32 regular LNG cargoes under the term deals, said a senior Petrobangla official.
In September, Vitol Asia delivered the first and only spot LNG cargo carrying around 138,000 cubic metres of fuel from the spot market.
Bangladesh could save around Tk 300 million (US$ 3.52 million) in purchasing LNG from the spot market from first cargo compared to the regular market as it could purchase LNG at $3.8321 per million British thermal unit (MMBTu).
Petrobangla, in a recent letter to National Board of Revenue (NBR), sought exemption from the payment of taxes on LNG due to rising expenses.
The agency claimed its tax rebate gets higher than Value Added Tax (VAT) and Advance Income Tax (AIT) it paid as it has to supply the gas at subsidised prices.
Currently, there is 15 per cent VAT and 2.0 per cent AIT on the import of LNG.
Petrobangla also demanded the revenue board stop scrapping its claim for tax rebate, which the company has already obtained.
The NBR had earlier scrapped the tax rebate facility on the import of LNG by Petrobangla.
The Petrobangla obtained rebate of advance VAT worth Tk 27.29 billion it paid until October 2020 against the Tk 33.84 billion it received.
Also, the VAT rebate of Tk 6.54 billion is under process, which would be adjusted after collecting from consumers.
Petrobangla claimed that it could not adjust the 15 per cent VAT it paid on the import of LNG in four tax-terms due to subsidised fuel prices at the consumer level.
Exemptions from the payment of VAT at the import stage will not leave any adverse impact on the revenue collection, as the state corporation will deposit the VAT to the public exchequer after collecting from consumers, it insisted.
The Petrobangla has no scope for gaining profit as per its business process, as the entity is following ‘subsidised pricing formula’ at consumer level, it argued.
As per the law, VAT is imposed at every stage of value addition, starting from the procurement of raw materials to supplying to end users, and paid VAT on raw materials or inputs is adjustable with the payable tax.
VAT incidence will not go beyond the consumer-level rate on the sum of paid net VAT at every stage.
The authorities concerned are empowered to scrap the VAT rebate facility, if rebate claim exceeds the payable VAT at the consumer level.
Under a 15-year contract, Bangladesh now buys LNG from Qatargas to import around 2.5 million tonnes of LNG every year.
The price as agreed is 12.65 per cent of the three-month average price of Brent crude oil plus $0.5 constant per MMBTu.
The country also has a 10-year term-deal to import LNG from Oman’s OTI at 11.9 per cent of the three-month average price of Brent crude oil plus a constant price of $0.40 cents per MMBTu.
Bangladesh has two offshore LNG re-gasification units.
Azizjst@yahoo.com