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Rising fuel price on global market: BPC runs risk of incurring huge losses

  • Published at 05:58 am October 3rd, 2018
File photo of petroleum oil storage terminals Bigstock

BPC officials said its fuel business profited in the last two-to-three fiscal years

State-run Bangladesh Petroleum Corporation (BPC) runs the risk of incurring losses of Tk6,000 crore to Tk8,000 crore in the current fiscal year—due to the rising import price of petroleum fuel.  

BPC officials said they had to import crude oil at $81.51 per barrel in August—compared to just $43.17 per barrel in April.

Similarly, diesel, as refined oil, was imported at $91.70 per barrel—which had been $50 per barrel in April, reports UNB.

"As a result, currently the government incurs a loss of Tk8.90 per litre for diesel and Tk12.33 per litre of furnace oil", said a top official at the marketing department of BPC—the state-owned import and marketing entity under the Energy Division.

State Minister for Power and Energy Nasrul Hamid said the rise in petroleum fuel prices on the world market will create a heavy burden on the government as more money will be spent on fuel subsidies.

He said this will also create a spillover effect on different sectors, including electricity generation, as a huge quantity of petroleum fuel is imported for power plants.

At present, about 25% of 11,000 MW power generation is dependent on petroleum fuel.

"If the upward trend on the global fuel market continues, it will affect both the power and petroleum sectors. There may be some impact on LNG prices as well since its price is linked to the price of petroleum," the state minister said.

The country has to import over 5.5 million tons of petroleum fuel, annually, while LNG imports began recently.

However, BPC officials said that, so far, they have not incurred any losses from selling other petroleum fuels like: octane, petrol, kerosene, and jet fuel. This is because most of the products, except jet fuel, are made with locally-produced condensate—a byproduct of natural gas.    

They said currently BPC will lose over Tk20 crore in selling diesel and furnace oil below its import cost.

"This loss will go up if rising trends continue on the global market", said a BPC official on condition of anonymity.

He said there is a global prediction that the petroleum price may again cross $100 per barrel.

The official also noted that the organization  also incurs losses due to the fluctuating dollar rate —as the exchange rate of the dollar is rising.

"A few months ago, we paid Tk83.50 against each dollar, and it now stands at Tk83.75", he said.

BPC officials said in last few years they have not incurred any losses from selling fuel . Rather, they say that the BPC’s fuel business has profited in the last two to three fiscal years.

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