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Petrobangla clears Tk 50 billion VAT arrears
Published : 26 Jun 2024, 03:12 AM
Petrobangla, the state-run oil, gas and mineral resources company, has opted to secure loans from the finance ministry to pay its substantial dues to the National Board of Revenue, or, NBR.
Customs duties, VAT, and income taxes totalled Tk 375 billion owed by Petrobangla to the NBR.
Rising LNG import costs have worsened financial strain, increasing the longstanding debt.
Petrobangla Chairman Janendra Nath Sarkar told bdnews24.com they are considering a long-term loan from the finance ministry to settle the dues.
They have already paid Tk 50 billion in VAT arrears.
The amount was paid to the NBR's Large Taxpayer Unit or LTU on Monday and Tuesday.
The Petrobangla chairman did not disclose specifics on the amount and duration of the loan from the ministry.
Petrobangla will clear NBR dues through both cash payments and account reconciliation, as decided in a joint meeting of the organisations last May.
As per NBR records, the outstanding amount was solely in VAT, totalling Tk 225.84 billion. Of this, Tk 132.78 billion was outstanding until March 2017.
Apart from VAT, there is another Tk 149.65 billion due in income tax and import duty. Of this, Chattogram Custom House will get Tk 147.13 billion from Petrobangla as import duty on LNG.
Petrobangla is seeking Tk 500 million loan from the International Islamic Trade Finance Corporation to address financial challenges, including outstanding dues to NBR and LNG import duties.
Chairman Janendra said that a 25-year loan is being taken from the finance ministry to meet the responsibility of importing LNG.
M Tamim, energy expert and former BUET professor, cited economic issues and the dollar shortage as the main reasons for the state-owned energy company's financial crisis.
He told bdnews24.com: "Petrobangla's financial crisis is due to LNG imports to meet the energy deficit, reflecting a lack of funds.”
"The dollar crisis has led to over $5 billion in unpaid bills in the energy sector. Consequently, revenue has decreased, and organisations cannot pay customs duties and VAT," he added.
Regarding Petrobanngla’s NBR dues, Tamim said government entities often delay settling debts.
"As government entities, they capitalise on this situation by prioritising overdue payments to avoid operational disruptions. Petrobangla's arrears date back much further than the past 3-4 years; it's a longstanding issue."
He believes this is creating a revenue shortfall.
To address these deficits, he recommended focusing on resolving the country's broader financial sector crisis.
Easing this crisis would alleviate shortages in funds, revenue, or dollars, he said.
During a meeting with the NBR on May 20, Petrobangla's chairman said once they receive funds from electricity and fertiliser sectors for gas sales, they will be able to settle all dues owed to NBR.
It was decided that Tk 132.78 billion, excluding interests, would be settled in the current fiscal year through phased book adjustments.
The finance ministry will manage the remaining dues in the next fiscal year, 2024-25, using a similar approach.
BPC AND ITS SUBSIDIARIES
Besides Petrobangla, Bangladesh Petroleum Corporation and its subsidiary companies under the Ministry of Power, Energy and Mineral Resources, owe the NBR a total Tk 172.26 billion.
Among them, BPC owes Tk 68.99 billion in income tax, VAT, and customs duties, while Titas Gas owes Tk 22.84 billion, Padma Oil owes Tk 21.45 billion, Sylhet Gas Fields owes Tk 17.35 billion, and Meghna Petroleum owes Tk 10.25 billion to the NBR.
