Power Division to seek duty waiver on furnace oil import

The Power Division is set to seek waiver on furnace oil import duty apprehending that the proposed duty will increase Tk 5,000 to 6,000crore extra subsidy for power sector along with its regular subsidy for 2020-2021.
"As per contract, fuel cost is a "pass through" item. If the government imposes duty on it, it will finally increase electricity tariff or government subsidy in power sector. However, examining the issue, we have asked the Power Division to write a letter      to the Finance Ministry for continue the duty exemption benefit on the import of furnace oil," Senior Secretary of the Energy Division Anisur Rahman told the Daily Observer on Wednesday.
He said if the government imposes duty on furnace oil import then the amount of subsidy (only for this purpose) will stand at TK 4,000 to 5,000 crore roughly.
Facing serious criticism from different corner, for the first time, the government takes a move to discourage high cost oil-fired power plant in the country. in line with the idea, it decides to impose duty on import of furnace oil in the proposed budget.
"I propose to withdraw the exemption benefit on the import of furnace oil to discourage the installation of furnace oil-based power plants," Finance Minister AHM Mustafa Kamal said in his budget speech while presenting the budget for the fiscal 2020-2021 in the parliament on June 11.
However, the private sector imports around 1.5 million tonnes of furnace oil for own generation, sources said.
Just to encourage private sector in the country's energy and power production, the government also gives a huge tax exemption on LNG import, importing heavy machineries' of power plants and LNG plants.
To increase the electricity generation capacity, the government encouraged the setting up of furnace oil-based power plants on an emergency basis, the import duty on furnace oil was waived at the import level in 2011 through a gazette notification.
Meanwhile, local energy experts and Consumers Association of Bangladesh (CAB) has appreciated the government move to stop giving duty exemption on importing furnace oil, saying that the government has taken the right decision at right time.
Energy Expert Prof M Tamim has welcomed the government move for imposing duty on furnace oil import, saying that our installed capacity is huge at the moment, along with this, our one third plants stand idle. We are paying huge capacity charge to the owners, he said.
"The government should run the low cost power plant and make a plan for installing affordable power projects thus it will be within the capacity of public reach," Dr Tamim said.
CAB's Energy Expert Professor Alam asked who will buy electricity in next one year.
"Demand of electricity has goes down from 14,000 MW to 9,000MW by this time, there is no way to think that the world economy will be change within the next six month. So my question is for what purpose we will give them waiver facilities," he asked.
Bangladesh Independent Power Producer Association President Imran Karim said, "It pushes the government to raise tariff. It may also affect industrialization and raise inflation during the era of Covid-19."
He added the government has stopped extension of the furnace oil- fired power plants. For this, it will not require for withdrawing duty on furnace oil import, he added.
He said the government move will also discourage the private sector investment due to increase in power tariff.