Petrobangla, the oil, gas and mineral corporation, has floated the offshore bidding, inviting international oil and gas companies to explore in the Bangladesh maritime area in the Bay of Bengal.

The tender, named “Oil and Natural Gas Exploration Under Bangladesh Offshore Bidding Round 2024”, was published in local newspapers and websites of concerned government entities including Bangladeshi missions abroad on Sunday giving six months time until September 9, 2024 for submission of the bids.

As per the floated tender, a total of 24 offshore blocks — of which nine are shallow blocks — and 15 deep sea blocks are available for the bidding round. 

The nine shallow sea blocks are SS-01, 02, 03, 05, 06, 07, 08, 10 and 11) and 15 deep sea blocks are DS-08, 09, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21 and 22.

The bidder, singly or in association with other companies, can bid for one or more blocks. 

Contracts will be signed with the successful bidders in line with the Bangladesh Offshore Model Production Sharing Contract 2023, said the tender. 

The features of the proposed contract include full repatriation of profit, no signature bonus or royalty, uncapped attractive gas price linked with international marker, oil price to be determined on the basis of the fair market value prevailing in South and Southeast Asia.

It entails no duty for equipment and machinery imported for petroleum operations while contractor's corporate income tax liability will be borne by Petrobangla, and bank guarantee for performance of the minimum exploration program.

There will be provision for assignment of interest and share-transfer and 100 percent cost recovery with a yearly cap of 75 percent. 

The contractor must have a mandatory work program consisting of 2D seismic  survey and mandatory purchase of available 2D multi-client seismic data against bidded blocks to get relief from mandatory work obligations proportionately.

They will have minimum work obligation in each of the exploration periods while biddable work program commitment over and above the mandatory program.

There will be petroleum profit sharing on the basis of R-factor with biddable upper and lower limits and option to sell contractor's share of natural gas in the domestic market to a third party, at a negotiated price, subject to Petrobangla's right of first refusal.

The bidder must ensure carried stake of 10 percent for state-owned Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) for both shallow and deep sea blocks. 

The bidders’ qualification criteria include — individual or in case of joint venture at least one member — offshore daily production of at least 15,000 barrel of oil or 150 mmsc of gas. Bidders must have at least one global experience (other than home country) in the oil and gas exploration and production.

The Information Package will be available at a cost of US$ 300 or equivalent Bangladeshi taka to the interested bidders/companies.

To enable companies to assess the geological prospects of the blocks on offer, Promotional and Data Packages are available on payment basis. Promotional Packages contain Bidding Document, sample seismic sections, gravity, magnetic, geological maps. Companies are required to purchase the Promotional Package in order to qualify for bidding, said the tender. 

The purchase price of the Promotional Package is US$ 10,000 or equivalent Bangladeshi taka. Purchase of Data Sales Package is optional. Several Data Sales Packages are available at different prices. 

Companies interested in bidding and purchase of Promotional and Data Sales Packages may contact the Director, Production Sharing Contract, Bangladesh Oil, Gas & Mineral Corporation (Petrobangla) Petrocentre, 3 Karan Bazar, Dhaka-1215, said the bidding tender. 

MSH

Companies and organisations will be required to file tax returns on the income generated by employee welfare funds from the current fiscal year and pay a 27.5 percent tax on the earnings. 

The Income Tax Act 2023 incorporates the provision, lifting the tax exemption and amnesty on the compulsion to file returns for funds such as provident funds, gratuity funds and workers' profit participation funds maintained by the private sector.

The law, however, has exempted government-managed provident funds from taxation, raising questions.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce & Industry, said there were many other avenues to collect tax.

"Employees benefit from provident funds after their retirement. So, the authority should not slap taxes on retirement benefit."

He said while levying the tax, the government has not treated provident funds of the private and public sectors equally.

"It is discriminatory," he said, adding that they would appeal to the tax authority for the withdrawal of the tax on income from provident funds.

Debabrata Roy Chowdhury, director for legal, regulatory and corporate affairs at Nestlé Bangladesh PLC, said the introduction of income tax on trust funds would lower the overall income from such schemes.

"This will have an adverse long-term impact on retired employees of private organisations."

Chowdhury urged the authority to address the issue in line with the spirit of the government's initiatives aimed at ensuring social security for private sector employees.

"The recent introduction of the universal pension scheme for private sector employees is a good example of that."

A senior official of the NBR, on condition of anonymity, said the income of government-managed provident funds was exempted in line with the Provident Fund Act 1925.

He said provident funds under the private sector had been historically exempted and there was no requirement to submit tax returns. As a result, it was unclear whether the funds were properly utilised.

"From now onwards, we will see proper disclosure."

The tax official said the contribution of payroll tax is about 3 percent of the total income tax although it should increase as the economy is growing.

Md Shahadat Hossain, a former president of the Institute of Chartered Accountants of Bangladesh, said income from investment in savings certificates, where people invest as a source of future earnings, is already taxed.

"From that perspective, the imposition of tax on provident and other employee welfare funds seems okay."

However, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said social protection for private sector employees was low.

"Provident and other workers' welfare-related funds provide little social protection. The imposition of tax will increase inequality. But there can't be any discrimination in taxation between private and government provident funds."

Khan, citing the latest income tax law that replaced the Income Tax Ordinance 1984, said the NBR tried to find new avenues to increase tax collection and improve the nation's revenue-gross domestic product ratio, which is one of the lowest in the world.

"We can see the desperation of the tax authority to boost collection. This ultimately reveals the inability of the NBR to catch the tax evaders and illicit money makers."