AMA Muhith Finance minister AMA Muhith has sought recommendations from the energy ministry to align gas price with the proposed tax cut for import and supply of Liquefied Natural Gas (LNG).
In a note, the finance minister said the Ministry of Energy and Mineral Resources will have to rationalise the gas price when the government offers tax exemption from LNG import.
In a summary sent by the National Board of Revenue (NBR), it sought his approval for offering tax exemption, except Value Added Tax (VAT) on the import stage, for import and local supply of LNG.
"It is imperative to set a minimum price for gas supply, although it would lead to increase in subsidies," the finance minister said in his note.
The government aimed to keep the prices of LNG mixed gas at tolerable level for consumers through offering tax benefit.
Experts have apprehended import of LNG may push up prices of gas in the local market.
Also, the energy ministry hinted an upward revision of gas price due to the import of LNG at higher cost.
"I'll be waiting for recommendations from the energy ministry," Muhith wrote.
After the note, the customs policy wing of the NBR recently sent a letter to the energy ministry requesting it to let the board know about the gas supply price after tax waiver of LNG.
Earlier, the Ministry of Energy and Mineral Resources, Bangladesh Energy Regulatory Commission (BERC) and VAT policy wing proposed the withdrawal of Duty, Supplementary Duty, Advance Income Tax (AIT) on the import of LNG.
However, VAT at a rate of 15 per cent at the import stage will remain unchanged.
Earlier, the government had aimed to fix selling prices of mixture of 2,700 MMCFD (million cubic feet per day) natural gas and 1,000 MMCFD re-gasified LNG at Tk 11.75 per cubic meter.
Officials said the decision on withdrawing duties and taxes, apart from the import-stage VAT, was taken in a high-powered meeting.
Currently, the total tax incidence for import of LNG is around 30 per cent including 5.0 per cent CD, 15 per cent VAT, 2.0 per cent AIT and 5.0 per cent ATV.
Earlier in April, the NBR allowed the first LNG shipment, arrived from Qatar, to enjoy duty-free facility through giving an undertaking.
The imported LNG would be gasified and pumped into the national gas grid at a rate of 500 million cubic feet per day (mmcfd).
The average cost of per unit of gas is Tk 7.34, but it will be Tk 13 per unit after the imported LNG arrives, said an estimation of Petrobangla.
A price fixation committee is working on finalising price, based on the recommendation from BERC of LNG in Bangladesh.
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