POST TIME: 20 June, 2018 00:00 00 AM / LAST MODIFIED: 20 June, 2018 03:02:20 AM
BPC feels the pinch as global oil prices rise
State-run petroleum corpn seeks Tk 8,100cr as subsidy for 2018-19 FY

BPC feels the pinch as global oil prices rise

The turmoil in international oil market of the past one year has hit the Bangladesh economy, with state-run  Bangladesh Petroleum Corporation (BPC) counting a huge loss to continue smooth supplies to local consumers. In order to cover the loss, the BPC has sought Tk 8,100 crore for the 2018-19 fiscal year as subsidy from the finance ministry, and the requirement of subsidy may go up to Tk 15,000 crore.

Talking to The Independent last week, BPC Chairman Md Akram Al Hossain said, “Recently, we wrote a letter seeking a subsidy of Tk 8,100 crore from the finance ministry for the next fiscal year, which starts next month.”

BPC sources said at present, the corporation is suffering a loss of Tk 10.58 in per litre of diesel and Tk 17 in per litre of furnace oil.

The Economic Review Report 2018, which was placed before parliament on 7 June, stated that the government has been suffering losses from selling diesel since November 2017 and furnace oil since October 2016.

The BPC will manage the accounts from its own funds as it did make some profits in the first quarter of the year. “We hope we will not have any losses at the end of this fiscal year as we made some profits, which would be adjusted with the losses,” explained a BPC official. “But the challenge ahead of us is that oil prices are unpredictable in the international market.”

“Last month, we calculated that we need Tk 8,100 crore subsidy for 2018–19 fiscal year and the proposal was forwarded to the finance ministry. But after a month, we saw the prices have shot up again. The subsidy sought could go up to Tk 15,000 crore,” the official disclosed to The Independent.

As per the international market trend monitored by OPEC, crude oil price was $44-$45 per barrel in June 2017 which went up to as high as $72 until the last month. The price, however, registered a fall in this month. The crude oil in international market was $65 yesterday.  

Diesel is being sold at Tk 65 per litre. Furnace oil costs Tk 45 per litre. The country consumes 64 lakh tonnes of   

petroleum products and, of that, 44.5 lakh tonnes are diesel,  8.25 lakh tonnes are of furnace oil and the remaining are of other types of petroleum products like petrol, octane and kerosene. The oil-based power plants are continuously increasing their imports of petroleum products.

This year, 10 new oil-based power plants, running on diesel or furnace oil, will start generation. The Bangladesh Power Development Board (PDB) said three diesel-based power plants have already started generation since last month, creating a huge demand for oil.

The BPC has calculated that the next fiscal year will see the use of 72 lakh tonnes of petroleum products and, of it, diesel will see the use of 50 lakh tonnes and furnace oil 9.5 lakh tonnes. The import bill will reach Tk 65,000 crore, which will definitely impact foreign exchange reserves. Again, for the past few months, the dollar price is on an uptrend in the country.

The BPC wants to implement the auto price formula, which is current in India and some other countries.

“We are trying our best to implement a price formula connected with the international market … if the oil price goes up in the international market, the local price will rise, and if the price in the international market goes down, the price here will also fall. But that formula will not be implemented before the national elections,” said a high-ranking BPC official.

A government official said that surge and fall in oil prices remain unpredictable as international politics and some other factors play the determining roles and that Bangladesh does not have any role to do with the prices.