The Bangladesh Petroleum Corporation (BPC) has started counting losses after five years following higher fuel oil prices globally amid the acute coronavirus crisis.
It now incurs a loss of an estimated Tk 80 million a day in oil trading, according to sources.
To reduce losses, energy ministry increased the price of furnace oil by Tk 11 per litre, or 26.19 per cent, to Tk 53 per litre with effect from July 04.
Presently, the state-run petroleum corporation incurs a loss of around Tk 6.0 per litre in diesel trading.
Despite furnace oil price hike, it suffered a loss of around Tk 1.0-1.5 per litre as on July 04.
Every day, the BPC sells 12,000 to 15,000 tonnes of diesel in domestic market after imports.
It also imports nominal quantity of furnace oil and octane to meet the local demand.
Diesel, the key petroleum product that is mostly imported from abroad, now retails is Tk 65 per litre.
The BPC is at a break-even position in octane trading.
Oil price in the international market is currently witnessing an uptrend following its steepest fall during the acute Covid-19 pandemic after March 2020.
The price of brent crude, the benchmark in international oil price, hovered at $76 per barrel as on July 05.
It was as low as $19.33 per barrel on April 21, 2020.
For price fall, the BPC made a profit of Tk 16 per litre in diesel and Tk 5.50 per litre in trading of the respective petroleum products in domestic market.
Officials said the BPC had racked up hefty profits riding on the sharp fall in oil prices globally over the past six years since 2015.
It, however, incurred huge losses until late 2014 when the oil price was higher.
The price of kerosene at retail level is Tk 65 per litre while octane and petrol prices are at Tk 89 and Tk 86 per litre respectively.
The BPC meets most of its furnace oil demand from the Eastern Refinery Ltd that produces around 350,000 tonnes of oil annually after refining crude oil.
Most of the country's octane and entire petrol and kerosene demands are met from the plant's output.
Furnace oil is mostly used at power plants, particularly at the privately-run facilities.
The private sector imports around 32-million tonnes annually to generate around 5,500 megawatt of electricity. They get 9.0-per cent service charge as incentive to import the fuel at their own.
The BPC imports around 400,000 tonnes of furnace oil to produce power at the state-run plants.
The BPC annually imports around 5.0-million tonnes of diesel, 1.30-million tonnes of crude oil, 0.4-million tonnes of furnace oil and 50,000 tonnes of octane.
It alone procures around 85 per cent of the country's oil requirement and the rest by the private sector.
It imports refined products based on Mean of Platts Arab Gulf Gasoil (MoPAG) assessments for five days, meaning the price is fixed at the average price of early two and post two days of assessment rates, including the delivery date.
The MoPAG is the benchmark oil pricing formula prepared by Platts, a US-based energy information provider and analyser.
The BPC imports crude oil on the basis of OPEC (Organisation of Petroleum Exporting Countries) pricing formula in ports on the delivery date.
The BPC and the private sector fix premium rate through negotiations with suppliers.
The premium rate is in addition to the international oil price payable by importers.
The government in an executive order on April 24, 2016, fixed the prices of diesel, kerosene, octane and petrol and their prices have remained unchanged since then.
