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Crude oil imports: double policy on price tariffs, traders affected

Due to the government’s dual policy of imposing government and private tariffs on the import of crude oil, private entrepreneurs have faced huge losses.

Therefore, the entrepreneurs of this sector have demanded the same policy for the import of crude oil in the public and private sectors.

According to sources, Bangladesh Petroleum Corporation (BPC) charges tariff value ($40 per barrel) while clearing Chittagong Custom House after importing crude oil.

On the other hand, when private companies import goods in the same HS code, they are charged at invoice value. Custom houses allow private firms to redeem goods subject to full payment.

It is known that the BPC determines the price of the product without properly determining the customs duty imposed on the product in respect of the invoice value of the current product. As a result, the National Board of Revenue (NBR) subsequently notes the demand for payment of excess to BPC. which BPC does not include in its pricing formula. Here the dual policy of NBR with the government is observed.

Energy sector experts say that one country cannot have two laws. In case of import of crude fuel oil, government and private price taxation should be in the same manner. Either the pricing formula should be determined by evaluating the duty on the tariff value, or the pricing formula should be determined by evaluating the duty on the invoice value.

Experts also say that there is no alternative to automatic price adjustment with the international market to stabilize the overall economy. Similarly, the government must come out of the dual policy of pricing before introducing the automatic adjustment system with the global market. Pricing should be done on the same principle for both public and private. Only then will the financial crisis be over and it will be possible to prevent fuel oil smuggling.

The sector stakeholders say that the import cost of private oil importers is increasing due to the dual policy in price taxation. At the same time additional VAT-tax has to be paid. BPC assesses the duty on oil imports at tariff value ($40 per barrel), more than double what the private sector has to pay.

As a result, they suffer huge financial losses. So same procedure should be followed in public and private sector. Public and private tariff assessment methods cannot be different in the same country.

Meanwhile, the International Monetary Fund (IMF) had stipulated the implementation of the Automated Pricing Formula from September last year. But even so far the government has not been able to implement this condition of the IMF.

As a result, the government is already under pressure to pay the outstanding financial subsidy in the power and energy sector. If this situation continues, there will be no way out of the ongoing financial crisis. Economists believe that the financial pressure will increase if this condition of IMF is not implemented quickly.

It is known that a delegation of the IMF came to Bangladesh last October to see how the conditions of the loan have been implemented. Then the delegation led by Rahul Anand of the IMF Mission held the last meeting with various organizations including Ministry of Finance, Power Department, Energy Department, Bangladesh Power Development Board (BPDB).

In that meeting, the organization again urged to reduce the subsidy in this sector by adjusting the price.

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