The state-run Power Development Board or PDB needs a tax break to import oil for its power plants like private producers, says the state minister for power.
A tax break will save as much as Tk 30 billion a year for the PDB, responsible for operating the government-owned plants, Nasrul Hamid told bdnews24.com.
“We have prepared a proposal, which will be forwarded to the finance ministry within a few days,” he said on Wednesday.
Oil-based power plants account for 28 percent of Bangladesh’s power generation capacity. The 46 plants can produce 3,676MW power. Of which, the PDB-owned plants’ capacity is 1,112MW.
More than half of the private producers import oil themselves while the PDB buys from the state-owned Bangladesh Petroleum Corporation or BPC.
The PDB incurred a loss of Tk 51.41 billion in the 10 months of fiscal 2016-17. It was Tk 38.67 billion in the previous fiscal year.
The PDB has to pay 18 percent VAT and a 40-cent tariff on per barrel oil it procures, said BPC Director Syed Mohammad Mozzammel Haque.
“A proposal for a tax break to PDB, like the private producers, has been forwarded to the National Board of Revenue or NBR, but they are yet to respond,” said Haque, who heads BPC’s Operations and Planning.
Private power producers enjoy a tax break on oil imports while the government buys power from them at a higher rate.
According to BPC figures, it sold 1.2 million tonnes of oil to power plants in fiscal 2015-16.
Meanwhile, power distribution companies have proposed a revision of power prices, after retail prices were hiked seven times and the wholesale rate five times in the last seven and a half years.
The latest proposes to increase prices by 15 percent in retail sales per unit and 6 percent for wholesale sales.
Bangladesh Energy Regulatory Commission or BERC is set to start a public-hearing over the proposal on Sep 25.
“It’s the BERC’s call. The government has nothing to do with it. If the government gives the PDB a tax break, it will lower the production cost,” State Minister Hamid said.