Titas Gas bleeds Tk1,680cr over 3 years despite turnaround efforts

The state-owned Titas Gas Transmission and Distribution Company PLC has suffered losses for the third consecutive fiscal year, with its net loss for FY2024–25 widening to Tk772 crore – up 4% from the previous year – despite a brief profit rebound in the final quarter.

According to the company's audited financial statements for FY25, the loss per share rose to Tk7.80, compared to Tk7.52 in the previous fiscal year. The company's net asset value per share also fell by 8% year-on-year to Tk90.13, while its net operating cash flow per share stood at Tk18.17.

Although Titas managed to post a net profit of around Tk170 crore in the April-June quarter, its first quarterly profit in two years, the gain was insufficient to offset the cumulative losses incurred earlier in the year.

Over the past three fiscal years, the state-run gas distributor has accumulated losses totalling Tk1,680 crore, marking a troubling trend for one of the largest energy utilities in the country.

Mounting system losses

Auditor ACNABIN Chartered Accountants, in its report for FY25, highlighted a sharp increase in system losses as one of the primary reasons behind Titas Gas's deteriorating financial health.

The audit report noted that the company's cost of sales for FY25 amounted to Tk35,407.77 crore, which included a net system loss of Tk2,421.76 crore – a staggering 34% rise from the previous year after deducting the allowable 2% system loss.

According to the financial statements, the company received 15,154 million cubic meters (mmcm) of gas during the year but sold only 13,718 mmcm to its customers, resulting in the massive discrepancy.

The system loss, the audit report said, was caused by several factors, including illegal gas connections, leaks from old and corroded distribution lines, damage caused by underground works of various government and private organisations, and inaccuracies in gas measurement for non-metered domestic users. Losses also stemmed from leakages in house lines of non-metered customers and measurement errors between intake and customer points.

A senior Titas official admitted that such operational inefficiencies, coupled with policy-level challenges, had worsened the company's financial position.

Tax burden deepens the crisis

Another major factor contributing to the loss was the imposition of a minimum tax rate on gas distribution companies.

"Titas Gas customers pay a 3% source tax on gas bills to the National Board of Revenue (NBR), which was previously adjustable against the company's tax liability," said a senior company officer. "However, under the minimum tax rule, the NBR now treats this source tax as final, meaning the company must record it as an expense."

This tax change significantly inflated Titas Gas's expenses and eroded its profitability.

To ease the burden, the government in the FY26 budget reduced the withholding tax –  commonly known as tax at source – on gas distribution companies from 2% to 0.6%. Analysts believe the move could help companies like Titas recover part of their lost earnings.

In its budget review, EBL Securities stated that the reduced source tax could substantially boost Titas Gas's net revenue and profitability. A senior company official, requesting anonymity, estimated that the company could save around Tk400–450 crore in tax expenses due to the adjustment.

Dividend and share decisions

Despite the heavy losses, the board of Titas Gas recommended a 2% cash dividend for FY25, down from 5% in the previous year. The company's annual general meeting is scheduled for 24 December, with 17 November set as the record date.

Following the announcement, Titas shares rose 0.57% to close at Tk17.60 on the Dhaka Stock Exchange on Tuesday.

Additionally, the company has decided to issue 28.27 lakh preference shares at a face value of Tk10 each to the finance ministry against a share money deposit of Tk282.74 crore. The issuance is pending shareholder approval at an extraordinary general meeting slated for 24 December.