Anomalies cost state Tk 730cr | The Daily Star
12:00 AM, December 30, 2012 / LAST MODIFIED: 12:00 AM, December 30, 2012

Anomalies cost state Tk 730cr

Audit watchdog finds state-run BPC didn't deposit Tk 639cr VAT to national exchequer even 5yrs after collection

The national exchequer lost Tk 730.33 crore between fiscal 2007-2008 and 2009-2010 due to irregularities in state-run Bangladesh Petroleum Corporation and its subsidiaries, according to an audit watchdog.
In 2008-2009, BPC received Tk 639.40 crore in value added tax from its marketing companies, but did not deposit the money with the state coffer, the Office of the Comptroller and Auditor General (OCAG) said in an audit report.
Rules stipulate that the companies must deposit with the National Board of Revenue the VAT collected in a particular month within the 10th of the next month.
But the BPC has not deposited the money even in five years.
The marketing companies said it was not their practice to deposit the VAT with the BPC, but the audit team found this response unsatisfactory.
According to the audit report, the BPC general manager (accounts and finance) always asks for VAT on the prices of oil sold through invoices from the state-run marketing companies. And the marketing companies deposit the VAT with the BPC by cheque.
The audit team found that Jamuna Oil, Meghna Petroleum and Padma Oil deposited with the BPC the VAT collected from dealers and agents.
In 2007-08 and 2008-09, the BPC received Tk 140.20 crore in VAT from Padma Oil, Tk 100.81 crore from Meghna Petroleum and Tk 89.08 crore from Jamuna Oil.
The anomalies were found after the OCAG opened audits into the BPC and Eastern Lubricants Blenders in Chittagong, Jamuna Oil Company in Chittagong and its depots at Doulatpur in Khulna, and Barisal, and Meghna Petroleum Company depots in Doulatpur and Jhalakathi between April 2010 and February 2011.
The OCAG first informed the secretary of the energy ministry about the irregularities in December 2010 and again wrote to the secretary in February last year, as he did not respond.
In April, another letter was sent to the secretary. Later, the ministry asked the BPC to deposit with the state coffer the collected VAT mentioned in the audit report and send it a copy of the money receipt. But the auditors found that the BPC did not comply with the ministry's instructions.
The irregularities did not stop there.
In 2007-08 and 2008-09, Jamuna Oil, Chittagong defied BPC's instructions and sold diesel beyond the permitted level through different depots just before the government announced a fuel price hike. The sale of diesel caused the government to lose Tk 13.97 crore.
According to the BPC instructions, the depots were not allowed to sell diesel 10 percent more than the amount sold in the same period of the previous year.
As the news of possible hike in oil prices were published in the media in May 2008, there were tendencies among dealers and agents to withdraw oil at abnormal rates. The BPC at that time reminded the managing directors of the marketing companies about its instructions.
In June the same year, six depots of Jamuna Oil -- the main depot in Chittagong and depots in Fatulla, Parbatipur, Baghabari, Srimangal and Sylhet -- sold 95.59 lakh litres of diesel, which was between 22.08 percent and 144.84 percent higher than the sales in June the previous year.
The audit report says it was done for profiteering by building up stocks illegally.
It says the Jamuna Oil management is aware of the sales and stocks at the depots on a particular day, but it did not take measures to stop abnormal sales of diesel to dealers and agents.
Jamuna Oil told the audit team that it would give its response later, but the reply never came, says the audit report.
The team also found that the BPC sold jet fuel at lower prices for international flights in 2008-09, though fuel prices went up on the international market at that time. It caused the nation to lose Tk 9.25 crore in revenues.
The BPC sold 69.89 lakh litres of duty-free jet fuel at $0.97 per litre at Dhaka international airport and $0.96 a litre at Chittagong airport between May and June, 2008, but the price should have been $1.16 a litre at that time.
The report says the BPC sold the fuel at a loss though there was no scope for it to do so.
The figures mentioned here are part of the total amount of Tk 730.33 crore that the state exchequer lost due to irregularities in the BPC and its subsidiaries.

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