Despite decreasing gasoline costs on the global market, Bangladesh Petroleum Corporation (BPC) is reportedly losing money on diesel sales.
BPC Chairman ABM Azad stated, “We are losing Tk 4-Tk 4.5 per liter of diesel hence we do not plan on changing fuelprice.” Due to the unpredictability of the global markets, the BPC has lost Tk 90 billion during the last year.
The BPC chairman stated that if the fuel cost is reduced in the current economic climate, the payback of the single point mooring may also be difficult.
The BPC also intends to take on additional projects to guarantee efficient gasoline delivery throughout the nation. He added, “Without fund flow, it may also have trouble.”
BPC sources estimate that the company loses Tk 80 million every day and Tk 2.4 billion every month.
As the agency hardly adjusts fuel prices with the global market, BPC officials also blamed the devaluation of local currency against the US dollar for the loss. The Bangladeshi taka depreciated almost Tk 10-12 per dollar.
Currently, BPC is losing Tk 4-5 per liter on diesel sales, down from Tk 8-10 per liter two and a half months ago.
According to BPC chairman, a global crude diesel price of $104 per barrel would enable the company to reach a breakeven.
It is important to give BPC, which is losing money, a chance to turn things around. Otherwise, BPC will be unable to cope if the energy market becomes unstable again in the future, said an official concerned.
Fuel demand in the country is on average 7.2 million tonnes, of which 4.9 million is diesels. BPC sells maximum 14,000 tonnes of diesel a day.
According to energy expert Prof M Tamim, BPC is still losing money on diesel, so there is no need to reduce the price now.
“Transport fares went up because of diesel prices, and even if the prices go down a little, fares won’t go down.” People won’t benefit from it. “It’s better for the government to earn more than this, so that it can give subsidies when fuel prices rise,” he said.
According to the expert, the government can lower octane and petrol prices.
During the financial year 2020-21, BPC recorded a loss of Tk 50 billion due to the increase in fuel oil prices on the world market as a result of the Russia-Ukraine conflict. There has been a loss of over Tk 90 billion since February of this year.
For BPC to meet its fuel costs, it must maintain a working capital equivalent to two months’ worth of fuel oil (over 25 percent of increment). BPC’s capital will also need to increase if the price on the international market increases.
As fuel oil was comparatively stable on the international market, BPC maintained its paid-up capital at Tk 120 billion in fiscal year 2020-21, which has now increased to Tk 200 billion.
“We have to spend around $4 billion to procure 6.5 million tonnes of fuel including local production through refineries,” ABM Azad said.
According to the chairman of the BPC earlier this year, their expenditures will exceed $5 billion, with an additional $800 million to $1 billion in the current fiscal year.
Following the adjustment in fuel tariffs in August, the BPC made a profit of over Tk 2 billion.
“But we faced an overall loss of Tk 4.07 billion as diesel prices soared again in the international market,” he said.
“The loss on diesel sales reached Tk 7.14 billion in September,” he explained.
Price changes on other fuel products have somewhat offset the loss. Bangladesh uses about 4.8 million tonnes of imported diesel annually.
The BPC chairman claimed that for each dollar spent on settling its gasoline import bills in September, they had to pay an additional 11 to 107 taka.
Due to the gas issue, BPC gave the Bangladesh Power Development Board (BPDB) more fuel to provide power plants. The BPC chairman claimed that it also raised costs for the business.
According to Nasrul Hamid, state minister for power and energy, due to the unstable global fuel market, the government does not intend to change fuel pricing.
