Photo : Collected
Chinese and Indian companies operating in Bangladesh, particularly those in the energy and power sector, have enjoyed numerous benefits for an extended period. However, they are now poised to encounter obstacles. Despite the government's intentions to assist them, they may find themselves deprived of financial advantages due to the International Monetary Fund's (IMF) stipulations.
For the past 15 years, the government has been extending various financial benefits to companies from China and India. However, due to the loan conditions imposed by the IMF, the government is now hesitant to continue offering these policy incentives. Despite its desire to provide such facilities, the government finds itself compelled to withdraw from them.
According to reliable sources, last week, the 1320 MW Bangladesh-China Power Company (Pvt.) Limited (BCPCL), also known as the Payra Thermal power plant, which is owned by the China Bangladesh Joint Venture Company, has applied for an extension of the Advance Income Tax (AIT) deduction at the import level on imported coal until June of next year.
The AIT deduction benefit on imported coal for the ultra-supercritical system power plant is set to expire in June of this year. Recently, BCPCL has submitted a request to the National Board of Revenue (NBR) seeking an extension of the deadline for AIT deduction on coal. The two Chinese companies involved in the BCPCL joint venture are China National Machinery Import and Export Corporation and China's state-owned China General Technology.
In addition, both the NBR and the Power Department have provided various policy and financial benefits for the government's procurement of power from the 1600 MW power plant of Adani Power Limited, constructed in Jharkhand, India last year. These benefits include special opportunities aimed at enhancing profits through a 25-year contract.
At that time, the opponents of the Adani contract called for its revision or even cancellation, citing this power contract as ‘against the interest’ of the country. At present, Bangladesh is importing about 1500 MW of electricity from Adani Power Limited.
Meanwhile, the IMF’s extended loan facility has called for all sorts of reforms to boost NBR’s revenue. The international body has asked to revoke NBR’s voluntary power to grant tax holiday benefits. Under this power, tax officials of NBR can grant tax holiday benefits to any taxpayer individual or company.
IMF believes that only the national parliament can have such power. Apart from that, a list of which sectors will get tax holiday benefits in the current budget has been announced. But beyond this list, the budget said that the NBR can give tax holiday benefits to any sector if it wants. IMF said, this power also need not be in NBR’s hands.
Besides, companies in the gas extraction sector get a special tax benefit called ‘Depression Allowance’. Although the companies do not spend anything in this sector, they get tax benefits. The IMF said to stop providing such facilities.
According to the Income Tax Act, no AIT is payable if the import of fuel oil and coal is within the margin of Tk 2,00,000 in Bangladesh. However, if it is more than Tk 2,00,000, a 0.60 percent income tax has to be paid. This rate will be only 1 percent in case the import of fuel oil is done other than the petrol-selling companies. However, in the case of refinery companies, this rate will be 3 percent for fuel fuel oil import. On the other hand, the AIT rate for gas expansion companies will be 3 percent.
In this regard, a senior official of the Finance Division told The Daily Messenger on condition of anonymity that the government cannot ignore the IMF conditions now. So, all these companies have to stop using the facilities that the government has been providing for the last 15 years to get loans. He also said that this government has no other option left.
Professor M Shamsul Alam, vice-president of the Consumers Association of Bangladesh (CAB) and energy expert, told The Daily Messenger that private power companies in the country are taking various benefits from NBR and power division, starting from machinery import duty exemption, charging capacity charges and taking payments in US dollars. But they have not given any benefit to the people of this country. So, it should be stopped.
Messenger/Fameema
