Fuel price to be hiked soon

BPC incurring loss Tk 83 cr daily

Mahfuja Mukul: The state-owned Bangladesh Petroleum Corporation (BPC) is in danger of losses after being in profit for seven consecutive years. As the price of fuel oil increases in the global market, the risk of total loss and daily loss of the company is increasing. According to BPC sources, the company is currently losing more than Tk 83 crore on an average daily. Which affects the power generation in the plants.
In this situation, either the price of fuel increases, or the government wants to be affordable.
The country is under the grip of continuous load shedding before Eid. There have also been proposals to reduce working hours after Eid to reduce load shedding and save energy. On the other hand, Minister of State for Power, Energy and Mineral Resources Nasrul Hamid has also indicated to increase the price of fuel oil. In this situation, BPC is looking at the government’s decision.
When the pandemic corona infection subsided, the oil market began to rise due to the increasing demand around the world in the beginning of 2021. By the end of the year, the price of diesel and kerosene has increased by Tk 15 to Tk 80 per litre. Oil markets then became more volatile when the Russia-Ukraine war broke out in February.
Crude oil prices have risen by an average of $16 per barrel over the past month. In this situation, BPC has to count huge losses in the sale of diesel and octane in the country’s market. The company is losing Tk 57 per liter of diesel and Tk 37 per liter of octane. As a result, BPC does not see any way without increasing the price.
According to the government agency, there is no loss if the price of crude oil is in the $80 range. Currently, the price of crude oil is over $120 per barrel. But almost all diesel is imported as refined oil, which costs more.
After the start of the Russia-Ukraine war, the price of fuel in the international market started to increase. Crude oil prices rose from $65 a barrel in December to $124 in March. It has since fluctuated slightly and is currently trading around $120.
The previous few years can be said to be the golden chapter for BPC. Counting losses year after year due to subsidy, the state-owned company made a profit of around Tk 47,000 crore in the seven financial years from 2014-15 to 2020-21. BPC also made good profits in the first half of the last financial year (2021-22).
According to BPC, currently the country’s demand for fuel oil is 6.5 million metric tons. Out of this, a little less than one-fourth or 1.5 million metric tons of crude oil is brought into the country and refined at the Eastern Refinery. After that, different types of fuel such as petrol, octane, diesel, kerosene and other petroleum products are produced. The rest of the demand is met by importing refined fuel oil.
Meanwhile, just as the government did not regularly reduce the price of oil in the previous years in the falling international market, it is not able to adjust the price suddenly even if crude oil exceeds 120 dollars per barrel. This has seen a decline in BPC’s increased profits so far. In this situation, Minister of State for Electricity, Energy and Mineral Resources Nasrul Hamid indicated to increase the price of oil before Eid. He told reporters that the price of fuel oil will be adjusted.
When asked by the journalists, the state minister said that the oil that is still stored in the country’s market can be bought at a relatively low price. As a result, the price will be adjusted anytime in July. But in that case, the government is thinking about how to reduce the pressure of oil price increase on the people.
Nasrul Hamid said that in the past, it has been seen that due to the increase in the price of fuel oil, the prices of various products, including public transport fares, have increased abnormally. Where 30 paisa should be increased, there has been an increase of two taka. As a result, people’s suffering has also increased. So, this time before increasing the price, a meeting will be held with all the stakeholders. In particular, meetings will be held with cargo owners, launch owners, bus owners and BRTA.
Meanwhile, the Consumers Association of Bangladesh (CAB) has objected to the initiative to raise oil prices on the pretext of BPC’s losses. CAB senior vice-president and energy expert Professor M Shamsul Alam said, if the price of oil has to be increased, then BPC should present the rationale for increasing the price by accounting for its own losses to the Bangladesh Energy Regulatory Commission (BERC). Otherwise, the initiative to increase the price of fuel will be illegal.
In this regard, BPC Chairman ABM Azad told NDC that BPC’s losses are currently on an average of Tk 2.5 thousand per month. If calculated daily, it is more than Tk 83 crore. However, the matter of adjusting the price of fuel is a matter of decision of the government. As the chairman of BPC, my responsibility is to report the profit and loss account of the company to the government. That’s what we’re doing.
The state minister hinted at increasing oil prices after Eid. On the question of how much the price increase can be, the chairman of BPC said that it is up to the government how the adjustment will be made. If I have to ask the government, then I would like my entire expenses to be paid to me. But that is not realistic.
When asked about CAB’s proposal regarding oil price hike, ABM Azad said, “I have no relation with BERC.” That is what the government will do. Cab is a private company, you have respect for what they say, you have value. But there is no use forcing their words on me. Cab is not my concern.
Asked whether BPC has made any demand to the government to increase the price, he said, no proposal has been sent from our side. No demand reported.