A five-member committee, headed by the Power Division secretary, has recommended creation of a 'buffer fund' and providing subsidy to state-run Petrobangla from next fiscal year to make payment to international oil companies (IOCs) against the purchase of natural gas, said officials.
The government can take the decision of providing subsidy to Petrobangla from next fiscal year (FY) 2016, the committee, formed to resolve the long-pending row between Petrobangla and the National Board of Revenue (NBR), recommended.
The government can frame guidelines over the required amount of subsidy, its allocation in the national budget and its release, the committee, headed by Power Division secretary Monowar Islam, suggested.
The committee came out with these recommendations to ensure that Petrobangla start clearing unpaid value added tax (VAT) and supplementary duty (SD) to the NBR without creating any obstacle to payment against gas purchase from the IOCs.
The committee also suggested depositing the unpaid VAT and SD to the government exchequer immediately to resolve the long-pending row.
Petrobangla can deposit the unpaid VAT and SD of the current FY15 to the government exchequer within this FY and inform it to the NBR subsequently, the committee suggested.
And from the day one of the next FY 2016, Petrobangla and its wholly owned subsidiary gas distribution companies should start paying VAT and SD to the NBR regularly, the committee suggested.
The government constituted the committee to resolve the decade-long dispute after NBR's unearthing by of the massive duty evasion by state-run gas companies.
Officials said, Petrobangla had not been paying VAT and SD to the government against purchase of natural gas being produced by the international oil companies (IOCs) although it was collecting such duties from the clients for long.
The government exempted the IOCs from paying VAT and SD through a statutory regulatory order (SRO) in 1993.
But four gas distribution companies-Titas Gas Transmission and Distribution Company Limited, Jalalabad Gas Transmission and Distribution System Limited, Bakhrabad Gas Distribution Company Limited and Karnaphuli Gas Transmission and Distribution Company - were collecting VAT and SD from all clients against sales of natural gas irrespective of gas coming from the IOC-operated fields or local company-operated fields.
But these four firms were depositing VAT and SD to the government exchequer only against the sales of gas being produced by local companies.
VAT and SD that were collected against sales of IOC-operated gas fields were deposited with Petrobangla, said officials.
Petrobangla was treating the fund as 'price deficit fund' and was spending the money to pay bills against purchase of natural gas from the IOCs, which is higher than sales rates.
The NBR detected this 'anomaly' in 2009 and pointed out that four companies collected VAT and SD worth Tk 132.78 billion from the clients from FY 2010 to January 2015 but did not deposit the money with the government treasury.
An amount of Tk 90.80 billion stood as cumulative interest on VAT and SD for non-payment of duties in right time, the revenue board stated.
It also filed suits against all the four state-run gas companies in February this year to collect the unpaid VAT and SD.
When contacted, Petrobangla chairman Ishtiaque Ahmad said, "We are ready to comply with any government decision."
He said the government should also look after the issue of timely payment to the IOCs against gas sales. Otherwise, the sector would be in trouble, he warned.
mazizur.rahman@outlook.com
