Bangladesh Petroleum Corporation (BPC) is now incurring a loss of Tk 630 million per day as the state-run company sells its imported products at rates lower than import cost.
According to fuel marketing agency, it has to incur a loss of Tk 37 per litre in the sale of diesel, Tk 10 in octane, Tk 15 in furnace oil, and Tk 7 in jet fuel.
“We’ve really been facing a tough situation. Every day we’re communicating the situation to the Energy and Mineral Resources Division”, ABM Azad, chairman of the BPC said.
He, however, declined to give any indication on any possible increase of the petroleum price in the country to offset the loss, reports UNB.
He said BPC has been considering different options and sending those to the top policy-making level.
“The government is the ultimate authority to make the final decision on any issue in regard to the petroleum fuel”, said the BPC chairman.
Responding to a question on any cut in taxes on the import of petroleum, Azad said, he did not make any such suggestion as it is beyond his capacity.
But he noted that in the last two fiscal years, the BPC had to pay Tk 190 billion in VAT and taxes.
The BPC chairman’s remarks came amid the growing petroleum price hike on the international market due to the war between Russia and Ukraine.
The crude oil price already crossed $113 per barrel on Thursday which was below $100 before the start of the war.
Even, before the war, the global fuel price witnessed a rising trend and crude oil price crossed $90 per barrel in November from below $50 in April last year.
Against that backdrop, the BPC, on 3 November 2021, raised the prices of diesel and kerosene at the retail level – effective from zero hours on 4 November 2021.
The prices of diesel and kerosene were increased to Tk. 80 per litre from Tk. 65 per litre – indicating a 23.1 per cent rise.
According to official sources, the BPC has planned to import 6.4 million tonnes of fuel oils for the calendar year 2022 amid the overheated international market which it estimates to cost over $3 billion. Of its import, more than 70 per cent is diesel.
Again, petroleum industry insiders fear a fresh hike in petroleum fuel prices while energy experts and economists are suggesting the government not to go for any further hike in price.
Eminent energy expert Dr M Tamim said though there is little option for the government, it should not go for any further price hike as ultimately it will hurt the common people.
“Peoples are already overburdened with the excessive hike of prices of essentials. Any further hike of petroleum price means making their life harder”, he said.
He suggested the government go for a duty-cut on the import of petroleum fuel to keep the prices low.
“Only option is to cut taxes on import of petroleum... If the government does it, it will be a kind of subsidy”, Tamim said.
Advisor of Consumers Association of Bangladesh (CAB), also an energy expert, Prof M Shamsul Alam also asked the government to cut the taxes on import of petroleum.
He said, currently there is about 30 per cent of different types of taxes imposed on petroleum prices.
Centre for Policy Dialogue (CPD) research director Dr Khondaker Golam Moazzem said the government can take loans from international financing agencies like IMF, World Bank to release the pressure in the economy to tackle the situation where it has to incur loss in petroleum sale.
He said it could a good option instead of going for any price hike of petroleum to deal with the current situation.
He also said that any new price hike will create further pressure on the people who have already been facing the high prices of essentials hurting the recovery from the Covid-19 disruptions.
