Power, Energy Budget: Revenue comes before plight of the people
The budget almost halved the allocation for the energy sector and proposed a flat import duty of Tk 13.75 for each litre of 11 imported refined petroleum products instead of the current 15 percent VAT and 5 percent advance tax on import.
For crude oil the flat rate of import duty will be Tk 7.02 for every litre and for furnace oil Tk 9.10.
"The decision was made to keep the petroleum prices stable in the domestic market. The prices of petroleum and its by-products fluctuate in the international market," Finance Minister AHM Mustafa Kamal said in his budget speech yesterday.
However, experts believe the decision will ensure revenue for the government but there is nothing in it for the people.
"It will not ensure the consumers get fuel at an affordable price," said Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD).
The system will only guarantee the government a steady revenue irrespective of the rise and fall of prices in the international market. The consumer will not benefit if international market prices fall, he said, adding that the Bangladesh Petroleum Corporation (BPC) might use the new system as an excuse to not reduce fuel prices in the local market at a time when prices are gradually falling in the international market.
BPC officials said that they were not sure whether the new import duty would reduce the existing VAT and taxes that reach a total of 37 percent. "Besides the VAT and advance tax [that are exempted in the proposed budget], we also pay 15 percent VAT on sales and 2 percent in Advance Income Tax. If we have to pay these as well, the fixed duty of Tk 13.75will be a burden," said a top BPC official.
BPC Chairman ABM Azad also said he was not in a position to say whether it would reduce the overall tax on fuel. "We will be able to make comments only after comparing the new system with the current one."
The government allocated Tk 34,686 crore for the power and energy sector. Although it has been increased by 33 percent, the energy division saw a decline in allocation.
The energy division, which is responsible for domestic mineral resources exploration, has got only Tk 911 crore, down from Tk 1,798 crore in the current fiscal.
Experts say the poor allocation is likely to hamper the gas and oil exploration by Bapex.
Energy expert Prof Badrul Imam said that the energy division should be the main priority of the government at a time when the power plants are facing acute shortage of primary fuel including gas, oil and coal.
The energy division caters for the primary fuel for the power plants and the government should increase the allocation for this division, he added.
"The poor allocation only reflects that the government is neglecting this important sector," said Prof Imam.
CPD's Moazzem said the coming budget was a conventional one. "It doesn't reflect the necessary budgetary measures needed to tackle the challenges the power and energy sector is facing."
The allocation for the energy sector should be increased for gas exploration.
"But they allocated more to increase the power generation capacity… About 50 percent of power generation capacity remains unutilised due to the fuel shortage. It will only increase the burden of capacity payments on consumers," he added.