State-run Petrobangla is set to save between Tk 60 billion and Tk 80 billion in the upcoming fiscal year (2025–26) following the government’s proposal to exempt Value Added Tax (VAT) on Liquefied Natural Gas (LNG) at the import stage.
Finance Adviser Dr Salehuddin Ahmed announced the exemption during his national budget speech on Monday, stating it aims to ease the financial pressure on the energy sector and ensure an uninterrupted gas supply.
“The exemption will take effect immediately,” said A.K.M. Mizanur Rahman, Director (Finance) at Petrobangla, in a statement to Just Energy News, shortly after the budget announcement.
He noted that this VAT exemption will enable Petrobangla to save a minimum of Tk 6,000 crore and potentially up to Tk 8,000 crore.
Petrobangla Chairman Md Rezanur Rahman told Just Energy News that the move would relieve the sector from a burdensome double taxation regime—15% VAT at both import and distribution stages—which added Tk 60–70 billion in annual costs.
“This dual taxation has inflated LNG import costs, particularly from the spot market, while also raising the government’s subsidy burden,” he noted.
Currently, the government allocates Tk 65 billion in gas subsidies to support the import of 82 LNG cargoes annually. With the VAT exemption, that figure could rise to 98 cargoes within the same subsidy envelope—potentially helping close the supply-demand gap.
Bangladesh currently supplies around 2,700 million cubic feet per day (mmcfd) of gas, against a demand of 3,700 mmcfd. Petrobangla believes the VAT waiver could help bridge the 1,000 mmcfd deficit. Gas distribution companies have already sought an immediate 100 mmcfd supply increase.
The dual-tax issue was formally raised on March 11, 2025, during a meeting at the Bangladesh Secretariat attended by Power and Energy Adviser Dr Fauzul Kabir Khan. Officials confirmed that Petrobangla currently supplies 2,713 mmcfd—1,936 mmcfd from domestic sources and 777 mmcfd from LNG imports.
For the current fiscal year, the government plans to import 95 LNG cargoes at an estimated cost of Tk 543.05 billion, while projected revenue stands at Tk 393.44 billion. Even after subsidies, the Energy and Mineral Resources Division anticipates a net loss of Tk 84.6 billion—raising alarm within the ministry.
The proposed budget also extends VAT exemption for locally manufactured LPG cylinders, albeit at a reduced rate, through June 30, 2027.