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BPDB seeks tax waiver after Tk 620bn loss

  • Shamim Jahangir
  • 20 September, 2021 12:00 AM
  • Print news

Bangladesh Power Development Board (BPDB) requested a waiver of tax deducted at source (TDS) on selling bulk electricity to power distribution companies.

The request came as the state-owned statutory organization incurred a cumulative loss of over Tk 620.46 billion.

BPDB may need to raise power tariff if the National Board of Revenue (NBR) doesn’t consider its request of the TDS waiver. 

The board purchases electricity from rentals, quick rentals and Independent Power Producers (IPP) beside importing from India as a single buyer.

It supplies the power to distribution companies as per the directive of the Bangladesh Energy Regulatory Commission (BERC), said a BPDB letter.

“BPDB incurred huge losses and suffer deficits of fund every year as it purchases power at a higher tariff from the private power plants and supply that electricity to the consumers at lower rates,” said BPDB chairman Engr Md Belayet Hossain.

 “This creates a gap of Tk 1.39 per unit between the production cost and tariff,” he said adding that reducing gas supply to power plants will further increase the necessity of subsidy.

As per the audit report on June 30, 2021, the cumulative loss of the BPDB stood at over Tk 620.46 billion, according to a BPDB official.

“BPDB therefore seeks waiver of six percent TDS on selling bulk electricity as per the Finance Bill 2021,” read the BPDB letter.

BPDB secretary Saiful Islam Azad signed the letter.  

According to Income Tax Ordinance, 1984 (Section 52N) of collection of tax on account of rental power, “Notwithstanding anything contained in this ordinance, BPDB, at the time of payment to any rental power company on account of purchase of rental power from that company shall collect, deduct or pay tax on the said payment at the rate of six percent.”

Officials said electricity generation may get costlier in the coming days that will push the cumulative loss.

They said the power plants are increasingly using costly liquid fuel due to a gradual decline in the supply of low-cost natural gas.

BPDB already sought Tk23.28 billion in subsidy to cover the losses it incurred over the last six and a half years for selling imported electricity at subsidised rates.

It also sought Tk105.04 billion in subsidy to cope with the losses incurred over the last 11 months in fiscal year 2020-21. The annual subsidy requirement may cross Tk 117 billion.  

But, the subsidy of BPDB will much more higher in the current fiscal year 2021-22 as electricity generation cost is sky rocking due to costlier of the natural gas, liquid fuel and coal costs.

In 2017, BPDB’s cumulative loss was Tk 450 billion.