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Energy division wants withdrawal of LNG VAT


Published : 28 Jun 2019 08:47 PM | Updated : 06 Sep 2020 01:59 AM

Energy and mineral resources division has requested the Finance Ministry to withdraw its proposal to impose Value Added Tax (VAT), Advance Income Tax (AIT) on imported Liquefied Natural Gas (LNG). Energy division official said the state owned Petrobangla is currently in liquidity crisis to supply LNG. If the taxation will be imposed on LNG then Petrobangla will be under pressure. Besides, the gas price will be high which will create a crisis in energy sector.

In this regard, State minister for power, energy and mineral resources Nasrul Hamid sent a letter on Thursday to Finance Minister AHM Mostafa Kamal, power division official said. He also requested to review the VAT and Tax on LED bulbs, VRF technology and other low electricity consuming AC for ensuring energy security.

Mentionable, Finance Minister AHM Mustafa Kamal in the FY20 budget has proposed to impose 15 percent VAT and 2 percent AIT on imported LNG, which will require as much as Tk 1000 crore. In his letter, Nasrul Hamid informed the finance minister that now the average tariff on per cubic meter of natural gas is Tk 7.17. But the imported tariff of LNG will be around Tk 39 on an average.

 That means the deficit on per cubic meter of gas will be Tk 31.83. It is essential to supply uninterrupted gas supply for continuity of countries development. In this regard energy division hopes for full consideration of the matter. It was said in the letter, Petrobangla will require at least Tk 941.70 crore to pay the taxes and duties if the government imposes two percent AIT on 1000mmcfd of imported LNG. Petrobangla is a no-profit organisation. So the organisation is going to face liquidity crisis due to the lack of adjustment income TAX on imported LNG. As a result Petrobangla will face serious problem.

The state minister also requested for withdrawal of five percent advance income tax on imported materials for drilling natural gas activities. Otherwise it could hamper exploration of new gas in the country. He also urged to withdraw 100 percent supplementary duty on LNG. Because when the LNG will be supplied to pipeline then it will be treated as natural gas.

“It can impose low rate VAT, TAX and import duty on LED light, VRF technology with low electricity consuming AC and energy savings refrigerator at affordable price. Besides, if the duty will be reduced on energy savings insulating materials for construction of building then people will be inspired to use energy savings products, which will help to ensure energy security,” said the state minister in his letter sent to the finance minister.