Titas Gas suffers losses amid rising system loss, high tax burden
Titas Gas reported a loss of Tk188.63 crore, a sharp contrast to the Tk7 crore profit recorded in the same quarter last year
Titas Gas Transmission and Distribution PLC, a publicly traded state-owned company, reported losses in the July-September quarter, attributing the setback to rising system losses and the recognition of tax at source as minimum tax.
As per the company's unaudited financial statement for the first quarter of this fiscal year, Titas Gas reported a loss of Tk188.63 crore, a sharp contrast to the Tk7 crore profit recorded in the same quarter last year.
At the end of the first quarter, its loss per share was Tk1.91.
In its statement, Titas Gas reported a system loss of 8.63%, significantly exceeding the allowable limit of 2%.
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The company further explained that, under Tax Law 2023, the provision for minimum tax previously did not apply to "any company related to gas transmission or distribution". Leveraging this exemption, Titas Gas had claimed refunds for excess tax deducted at source that exceeded its actual liability. However, this provision was abolished this year.
As a result, tax deducted at source is now treated as the minimum tax if the actual tax liability is lower than the amount deducted. Consequently, the company recognised the entire tax deducted at source as a current tax expense, contributing significantly to its losses, the statement concluded.
In the first quarter, despite incurring losses, the company was required to pay Tk132 crore as minimum tax, a sharp increase from just Tk6 crore in the same quarter last year.
In January 2023, the government hiked gas prices for power, industries, and commercial (hotel and restaurant) sectors up to 179%.
Meanwhile, Titas Gas experienced a 9.73% decline in revenue, falling to Tk8,267 crore in the July-September quarter, driven by a significant reduction in gas supply to the power and industrial sectors.
Titas Gas to issue preference shares to govt
Titas Gas has decided to issue non-cumulative preference shares to the government against share money deposits totaling Tk282.75 crore, pending approval from the Bangladesh Securities and Exchange Commission (BSEC).
Currently, the company holds Tk351.61 crore in share money deposits from the government.
Unlike common shares, preference shareholders are not the owner of the company; they instead enjoy a priority over common shareholders in getting dividends and redemption rights in cases of bankruptcy.
Titas will not have to pay the government any previous year's unpaid preference share dividends due to the "non-cumulative" nature.
Earlier, on 27 October, its board recommended that a 5% cash dividend for the fiscal year of 2023-24, equivalent to Tk49 crore, be paid from its retained earnings.
Last year, it incurred a loss of Tk744 crore. Since inception, the gas distributor incurred a loss of Tk165 crore for the first time in FY23 and paid a 5% cash dividend to its shareholders.
