The Power Division under the Ministry of Power, Energy, and Mineral Resources has requested the National Board of Revenue (NBR) to withdraw source tax from power distribution and generation activities of publicly-owned companies.
While private power generation companies are already exempt from source tax, an official noted that continuing to impose this tax on public companies increases generation and distribution costs.
Between fiscal years 2021-22 and 2022-23, five power distribution companies paid approximately Tk 4,418 crore in source tax. Additionally, 15 units under three state-owned power generation companies—North West Power Generation Company Limited, Ashuganj Power Station Company Ltd, and the Electricity Generation Company of Bangladesh (EGCB)—paid Tk 688.24 crore during the same period.
The NBR has also demanded outstanding arrears from the Bangladesh Power Development Board (BPDB), according to an official.
BPDB Faces Financial Strain
“We have sought three years from the International Monetary Fund (IMF) to eliminate subsidies by minimizing internal costs,” BPDB Chairman Rezaul Karim told Just Energy News on Wednesday. He added that the Power Division plans to meet with the NBR chairman to discuss the matter.
“Despite clearing regular arrears, we still face additional pressure to pay Tk 35,000 crore in electricity bills,” said Karim. “The source tax further burdens us as we work to optimize internal costs.”
Tax Disparities Impact Costs
Data shows that between 2021-22 and 2022-23, Dhaka Power Distribution Company Ltd (DPDC) paid Tk 846.14 crore in source tax, while Dhaka Electric Supply Company Ltd (DESCO) paid Tk 524.96 crore.
Other public power entities, including the Bangladesh Rural Electrification Board (BREB), West Zone Power Distribution Company (WZPDCO), and Northern Electricity Supply Company Ltd (NESCO), paid Tk 2,491.87 crore, Tk 263.15 crore, and Tk 291.87 crore, respectively.
Meanwhile, the three state-owned generation companies—North West Power Generation Company, Ashuganj Power Station Company Ltd, and EGCB—paid Tk 372.29 crore, Tk 199.23 crore, and Tk 116.71 crore, respectively, during the same period.
Private power companies, however, remain exempt from source tax, a policy designed to encourage private sector investment in power generation. Officials argue that this disparity raises the per-kilowatt-hour cost of electricity generation for public entities.
Industry Voices Concerns
EGCB Managing Director Maj. Gen. (retd.) Moin Uddin expressed frustration over the tax policy, saying, “There is no provision in the Power Purchase Agreement (PPA) with BPDB to pay a 6% source tax. However, BPDB collects it on every electricity sale. If this continues, state-owned companies will suffer financial losses despite achieving high efficiency.”
He further revealed that EGCB has Tk 5,000 crore in outstanding power sales arrears, with monthly electricity sales of Tk 300 crore but monthly payments amounting to just Tk 30-40 crore. “This financial shortfall often forces us to halt development projects,” he added.
Similarly, Ashuganj Power Station Company Ltd Managing Director Sayeed Akram Ullah stated that his company has yet to receive Tk 6,300 crore in outstanding payments, equivalent to 14 months of bills, from BPDB. He claimed that the source tax, not included in the PPA, is being deducted from electricity sales volumes.
Officials warn that the dual taxation policy between public and private power companies undermines cost efficiency and creates additional challenges for public sector entities.
