BPC starts duty-free import of furnace oil

Dhaka,  Wed,  24 May 2017
Published : 17 May 2017, 00:24:03
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BPC starts duty-free import of furnace oil

NBR yet to issue letter in this regard
M Azizur Rahman


The Bangladesh Petroleum Corporation (BPC), for the first time, has stopped paying duties and taxes on import of furnace oil from the international market following assurance from the revenue board, officials said.

The state-run corporation recently imported a cargo carrying 20,000 tonnes of furnace oil from an overseas supplier and subsequently wrote to the National Board of Revenue (NBR) for issuing a formal letter over import duty waiver, BPC's director for operations and planning Sayed Mohammad Mozammel Haque told the FE Tuesday.

"Although the letter is yet to be issued by the NBR, we did not pay import duties and taxes against the import of furnace oil," he said.

He expressed the hope that the NBR would issue the letter shortly as the BPC sought duty and tax waiver attaching a letter from state-run Bangladesh Power Development Board (BPDB) that spelled out the furnace oil being imported would be used for electricity generation.

The entrepreneurs of the country's private sector power plants have been enjoying the duty and tax waiver facility exclusively since January 26, 2011.

A gazette notification issued by the Ministry of Finance on January 26, 2011 stated that the furnace oil to be used in both private and public sector power plants for electricity generation would be free from taxes and import duties.

Before enjoying facility, the importers have to certify that the furnace oil to be imported duty-and tax-free would be used for electricity generation, as per the government notification.

Although the BPC was also supposed to enjoy similar facility of importing furnace oil duty-free as per the gazette notification, the NBR had put restrictions on it alleging that the Corporation had huge unpaid dues to the Board, a senior NBR official said.

Riding on escalated profit against oil trading, the BPC, however, cleared all dues worth Tk 271 billion last year, which included outstanding value added tax (VAT) and import duties to the NBR.

Import cost of furnace oil of the BPC would decline at least by Tk 9 per litre to Tk 33 per litre from the current price of Tk 42 per litre with tax and duty waiver by the NBR, said BPC's marketing director Mir Ali Reza.

Oil-fired power plants will be able to use cheaper furnace oil with duty waiver, he said.

Officials said the BPC had to pay 12 per cent customs duty and 15 per cent VAT at the import stage before withdrawal of the NBR's restrictions. They said the BPC has long been seeking duty and tax waiver on import of furnace oil and restoration of its rights to import the entire quantity of the fuel and supply it to power plants to 'check pilferage and ensure efficient management.'

An overheated international oil market, coupled with BPC's weak fiscal condition, had prompted the Energy and Mineral Resources Division under the Ministry of Power, Energy and Mineral Resources to allow import of furnace oil by the private sector power plants a couple of years ago.

The government has also been providing 9.0 per cent service charge along with import costs to the private oil importers as an incentive, the official said.

The BPC's furnace oil import fell drastically by around 60 per cent to 481,673 tonnes in 2016 from over 1.0 million tonnes in 2013 as a consequence.

Mr Reza said the BPC will import 50 per cent of furnace oil requirements through open tendering and the remaining 50 per cent through term deals with suppliers.

    Azizjst@yahoo.com
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