State-owned Bangladesh Petroleum Corporation (BPC), which has been in the red since 1999 due to soaring oil prices, is all set to amass nearly Tk 16,500 crore in the current fiscal, thanks to a nose-dive in oil prices in the international from around $110 per barrel to an 11-year low of $36.06 last Monday. BPC holds the monopoly of importing and marketing 1.3 million ton crude and 4 million ton refined oils each year and has made a staggering Tk 5,000 profit even in the last fiscal. Over the past decade, Bangladesh has been spending between Tk 34,000 crore and Tk 38,000 crore per annum on import of crude and refined oil. Ever since oil prices plummeted, BPC has been saving around 50 per cent of its earlier import cost, which translates into annual savings of nearly Tk 17,000 crore to Tk 19,000 crore.
Sadly though, BPC’s profit has come at the expense of common taxpayers who continue to pay the same high price for diesel, kerosene, petrol and octane despite plunging oil prices in international markets making headlines every now and then. BPC has claimed that prices cannot be lowered till the corporation pays off all its debts.
BPC sources told The Independent that while the corporation has already paid Tk 3,000 crore in loans and liabilities to Petrobangla and various state-run banks, it still owes Petrobangla and state-run banks over Tk 26,000 crore.
Talking with The Independent, adviser of Consumers Association of Bangladesh (CAB), Prof Dr Shamsul Alam, said that the government for long has been subsidising import of oil from the international market. Those are subsidies and not loans as BPC represents the government and the amount of subsidy that the government gives BPC is adjusted in the revenue budget in each fiscal, according to him, hence BPC’s claim that it needs to pay off its debts at the expense of imposing high fuel prices on common people despite low prices in the international market is not justified, said Prof Alam.
“When international price of oil increases, the oil price in the country also increases but when it continuously decreases and you don’t lower prices, it is not right,” he said.
Meanwhile, at a seminar on the investment scenario in Bangladesh organised by the Board of Investment last Tuesday, Chief Economist of Bangladesh Bank, Birupaksha Pal, said that if the price of oil is lowered in Bangladesh, it will increase the amount of investment in the country.
Explaining his stance, Birupaksha said that when the price of oil is low in the international market, if it is simultaneously lowered in Bangladesh, inflation will be lowered and so will the interest rate on savings. This in turn will lower the interest rate on loans, thus increasing investment in Bangladesh.
However, Energy Adviser to Prime Minister Sheikh Hasina, Dr Tawfique-E-Elahi Chowdhuri, who was also present at the seminar, opposed Birupaksha’s view. Dr Tawfique said that he had discussed the issue with several economists but no one could say for sure that lowering of oil prices would result in increased investment.
He also said that common people will not benefit from lowering of oil prices. “If diesel price is increased by Tk 1, then bus fare increases by Tk 10. However, if diesel price is lowered by Tk 10, bus fare does not reduce by Tk 1 even if the government wants to impose that,” he said.
Talking with The Independent, Professor of Mineral and Petroleum Engineering Department of BUET, Prof M Tamim, echoed Dr Tawfique’s views. He said that even if diesel price is lowered in sync with international prices, businessmen will be the only beneficiaries.
“Common people will not get the benefits. Naturally with reduction in oil prices, transport fares as well as prices of essentials reduce but that’s not the case in Bangladesh. Because there is a syndicate in every sector and they will hinder the government’s attempts at lowering transport fares and prices of essentials,” he said.
Prof Tamim was quick to add though that the prices of petrol and octane should be lowered. “I don’t see any excuse for not lowering those prices,” he said.
A high official from BPC who did not wish to be named told The Independent that the claim that BPC does not need to pay off its debts is not true. He said that the BPC has taken loans from state-owned banks and is paying off old debts with the profits being made currently.
The official admitted that the BPC has been making profit since September 2014 and that this profit can be used for development of the Energy and Power sector but that is a decision which should be made at the highest policy making level.
About the lowering oil prices, the official said they do not have the authority to do so and again, that too is a decision best left to the highest level.
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Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.
Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.