BPC seeks tax waiver on furnace oil

Bangladesh Petroleum Corporation (BPC) wants tax waiver from National Board of Revenue (NBR) to supply tax-free furnace oil to state- run power plants.
This is for the first time BPC has sought such tax holiday from the NBR although the independent power producers (IPPs)'s are enjoying this facilities from the beginning, according to the Energy Division.
"We procured 21,000 tonnes of furnace oil recently, however, for the first time we sought this waiver just to compete with the IPPs which will slash down the cost of the power generation of the state owned companies," a senior official of the BPC told the Daily Observer on Wednesday.
For the continuation of the power generation from fuel-oil based power plants both from public and private sectors, the Finance Ministry issued a gazette notification on January 26, 2011, declaring that all kinds of oil to be used for power plants would be free of taxes and import duties.
But a few years back, NBR restricted the BPC to enjoy the opportunity.
According to the Power development Board (PDB), it runs 42 oil-based power plants which consume 1.5 million tonnes of furnace oil. The IPPS were collecting their fuel in their own ways, the BPC supplies only 4 lakh tonnes of furnace oil, as it has to pay taxes and duties to the government. But IPPs enjoy tax- and duty-free oil import facilities, and also receive 9 per cent handling charges from the government. So, in terms of competition and earning, the BPC has been far behind them in this business.
"BPC is selling furnace oil at Tk 42 per litre. But if we get the tax-free facility, the price will come down to less than Tk 11per litre. So, we hope that in future, the IPPs would not need to import fuel and the country, which will save billions of dollars. Also, the price of power production will go down," the official said.
IPPs are getting 9 per cent service charges from the government and are enjoying tax- and- duty-free import facilities. Some IPPs might even be involved in money laundering in the guise of the fuel import business, it was alleged.