Petrobangla grapples with Tk24,293cr dues

TBS Infographic

The state-run Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) is grappling with substantial outstanding dues amounting to over Tk24,293 crore, including $722 million (around Tk8,664 crore) owed to foreign companies for the purchase of natural gas and the import of liquefied natural gas (LNG), according to sources within the company.

Of this total, Petrobangla has accrued around Tk15,629.40 crore in dues to the Chattogram Customs House as of August 2024 due to unpaid duties and VAT related to LNG imports.

Meanwhile, as of June 2024, local power generation plants, fertiliser factories, and various public and private institutions owe Petrobangla around Tk28,707 crore.

Officials indicate that the company is unable to settle its outstanding debts to foreign companies because the Finance Division has not released the necessary funds, worsened by a dollar shortage in the domestic market.

With the value of the dollar rising in the country, Petrobangla is incurring a loss of about Tk1.50 per cubic metre by purchasing gas at a high price and selling it at a lower price. Although the government is expected to provide subsidies, these funds have not been made available, they added.

As of 26 August 2024, Petrobangla has an outstanding debt of $222.55 million (around Tk2,670 crore) for gas supplied from the Bibiana gas field operated by Chevron Bangladesh. Additionally, it owes $499.54 million (around Tk5,994 crore) to six foreign companies for LNG purchases from the spot market between April and August.

Petrobangla Director (Finance) AKM Mizanur Rahman, acknowledging that the company is burdened with debt, told TBS, "Since the Finance Division has not released funds, we have been unable to collect dues from the Power Development Board (PDB) and the Bangladesh Chemical Industries Corporation (BCIC). Additionally, due to the dollar crisis, we have been unable to pay outstanding amounts owed to foreign companies."
 
He said, "The dollar crisis has slightly improved in recent days. We are hopeful that if the government releases the subsidy of Tk1.5 per cubic metre and clears the arrears owed to the Power Division, we will be able to pay off our debts to foreign companies soon."
 
Regarding the duty and VAT owed to the Chattogram Customs House, he explained, "Initially, there were no government instructions to include duty and VAT in the gas tariff, so the amounts were not paid. However, since February 2023, duty and VAT have been included."
 
"Following the tariff adjustment, Petrobangla has been making regular payments. In the past year and a half, we have paid around Tk5,000 crore in duty and Tk1,150 crore in VAT," he added.
 
Chattogram Customs House Deputy Commissioner Saidul Islam told TBS that when any product is imported, all public and private institutions have to pay customs duty, advanced income tax and VAT at the rates prescribed in the Customs Act. "Petrobangla being a government organisation gets the opportunity to release its products by keeping these duties and VAT due."
 
"In addition to sending letters to various government institutions to collect the arrears, the issue has been raised in meetings with the National Board of Revenue and other relevant ministries," he added.

According to Petrobangla, as of June 2024, power generation plants managed by the Power Development Board (PDB) owed Tk7,607 crore to six companies under Petrobangla. Additionally, various privately operated power generation plants owed Tk10,300 crore to Petrobangla.
 
At the time, fertiliser factories managed by the Bangladesh Chemical Industries Corporation (BCIC) owed Tk2,304 crore, while the private fertiliser factory Karnaphuli Fertiliser Company Limited owed Tk496 crore. Furthermore, various public and private companies as well as residential users owed Petrobangla around Tk8,000 crore.
 
Petrobangla supplies gas nationwide through six companies that purchase from both domestic and foreign-operated gas fields. These companies are Titas Gas Transmission and Distribution Company Limited, Jalalabad Gas T&D System Limited, Karnaphuli Gas Distribution Company Limited, Pashchimanchal Gas Company Limited, Bakhrabad Gas Distribution Company Limited and Sundarban Gas Company Limited.
 
To meet the growing local demand, Petrobangla began importing liquefied natural gas (LNG) from foreign companies in 2019, which requires payment in dollars. This has led to a significant annual need for foreign exchange. In recent years, the company has faced challenges due to the foreign exchange crisis in the country.***