The state-run Bangladesh Petroleum Corporation (BPC) has placed a proposal with the relevant ministry for a substantial hike in prices of petroleum products to "avoid losses" following oil-price rises on the international market over the past several months.
In a recent letter to the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) the corporation proposed around a 31 per cent increase to Tk 55 in the price of per-litre furnace oil, and 11 per cent or Tk 72 per litre in diesel and kerosene prices.
The state petroleum corporation, however, did not seek any hike in the domestic rates of petrol and octane.
The BPC pleads for oil-price raise also to ensure availability of funds for execution of some 10 development projects planned to implement on its own, a senior BPC official said.
The government, by an executive order on April 24, 2016, had reduced the retail price of furnace oil, diesel, kerosene, octane and petrol to Tk 42 per litre, Tk 65 per litre, Tk 65 per litre, Tk 89 per litre and Tk 86 per litre as global oil prices hit rock bottom. The rates are still effective in domestic marketing.
After bagging hefty profits over the past three years since late 2014, the BPC started incurring loss since November last year as international prices have been escalating since mid-June 2017 due to cuts in oil production by some of the major oil exporters coupled with international political turmoil-especially in the oil-rich Middle East.
"BPC has already incurred a loss of over Tk 5.0 billion in oil trading over three months until January 2018 as the price of the petroleum products on the international market continued on an upturn," a senior BPC official said.
Currently, it is incurring a loss of more than Tk 100 million every day, according to the official.
The loss stands at Tk 9.80 per litre for trading in furnace oil while Tk 5.24 per litre for diesel and Tk 4.74 per litre for kerosene, considering the January oil prices on the international market.
The price of brent crude--the benchmark in international oil price--climbed up to $ 71 per barrel in January 2018, from $47 in June 2017 and below $30 in early 2016.
The BPC official said the state trading agency was incurring losses in oil trade as the cost -- import cost with 31 per cent tax and freight charges plus margins for the company and dealers -- is higher than the retailing rates.
The BPC imported diesel at $ 50.31 per barrel in April 2016, which soared to $ 82.10 per barrel in January 2018, he said.
Its import price of furnace oil increased to around $412.41 per tonne in January 2018 from $ 216 in April 2016.
The petroleum corporation imported Brent crude at $ 43.17 per barrel in April 2016 and kerosene at $ 53.29 per barrel, which shot up to $ 65.49 per barrel and $82.99 per barrel respectively in January 2018, according to the official.
It had made profit through trading in the petroleum products since September 2014 until October 2017 due to the slump in international oil prices, amid the Middle-East uprisings and wars.
The BPC booked a profit of Tk 42.12 billion during fiscal year 2014-15 (FY 2015), Tk 63.42 billion during FY 2016 and Tk 43.99 billion during FY 2017, according to BPC statistics.
It also paid Tk 22 billion into government exchequer during FY 2016 and FY 2017 as dividend.
The corporation also paid dues worth Tk 30.90 billion to state-owned Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank, Tk 17.58 billion to Petrobangla, and Tk 6.03 billion as pending value-added tax (VAT) to the National Board of Revenue (NBR) over the past several years from its profit.
Before then, it had incurred a loss of Tk 23.32 billion in FY2013-14 and Tk 48.32 billion in FY2012-13. In FY2011-12, the loss was Tk 113.71 billion, which was Tk 88.40 billion in FY2010-11. The BPC had counted losses every year since FY2001-02 till FY2013-14.
The BPC has undertaken a programme to implement a number of projects, including a second-crude-oil refining unit of Eastern Refinery Ltd (ERL), country's first single-point-mooring (SPM) system, two oil-carrying pipelines along Dhaka - Chittagong and Kanchon Bridge-Kurmitola at a total cost of Tk 167.39 billion from its own coffers.
Contacted over the latest developments on the fuel front, energy adviser of the Consumers' Association of Bangladesh (CAB) Dr M Shamsul Alam protested the BPC move to raise the domestic oil prices.
He said, "The accounting system of the BPC is still non-transparent and there are allegations of corruption against BPC officials."
Besides, the issue of hiking domestic oil prices should be dealt with by the country's energy regulator - Bangladesh Energy Regulatory Commission (BERC).
Mr Alam noted that BPC should place its oil-price-hike proposal to the BERC first.