BPC books record profits as international oil prices fall

BPC is still making a profit of Tk 23 to Tk 28 per litre of petrol and octane and about Tk 16 in the cases of diesel and kerosene

The Bangladesh Petroleum Corporation (BPC), which has been in the red since 1999 due to soaring oil prices, has made staggering profits of Tk 7,050 crore in the outgoing fiscal year 2015–16.

On the back of sliding global oil prices, this is a record profit that the state-owned corporation has logged since it was founded 40 years ago. The BPC has also deposited Tk 1,758 crore in the national exchequer in the outgoing fiscal year.
Though the government made some price adjustments recently following demands by economists and businesses, there is still a big difference between international and local prices.
On March 31, the government cut the price of furnace oil, mostly used by industries and power plants, by more than 30 per cent—to Tk 42 a litre. Then, on April 24, the government brought down the prices of octane and petrol by Tk 10 a litre and diesel and kerosene by Tk 3 per litre.
Despite the cuts, the BPC is still making a profit of Tk 23 to Tk 28 per litre of petrol and octane and about Tk 16 in the cases of diesel and kerosene.
In the last fiscal year, the BPC imported a total of 26.06 lakh tonnes of diesel, 1.37 lakh tonnes of petrol, 1.47 lakh tonnes of octane, 2.13 lakh tonnes of kerosene, 3.47 lakh tonnes of jet fuel and 7.11 lakh tonnes of furnace oil.
After five consecutive years of losses, the turnaround in fortunes for the BPC came in the last fiscal year, 2014–15, when it made profits of Tk 4,126 crore. Before that, the BPC last logged profits of Tk 323 crore in the fiscal year 2008–09.
The BPC was in the red every year between 2009–10 and 2013–14 as oil prices were high in the international market. During that time, oil prices were not adjusted in the local market in accordance with global prices. The losses forced the government to set aside a huge amount of taxpayers' money as subsidies in its budget in those five years. The amount of money that the government set aside from taxpayers’ money was nearly Tk 57,000 crore, of which the government provided Tk 26,350 crore as loan.
The BPC, with just its earnings in the last few years, has been able to pay off its debt of around Tk 17,300 crore to several banks.
The state-owned corporation has contributed around Tk 71,000 crore to the national exchequer since its inception in 1976.
Talking with The Independent, Shankar Prashad Dev, the BPC’s director (finance), said the BPC has been a losing concern for several years. “Because of that, no money could be channelled out for the purposes of development. Now the organisation is making profits because of the lower oil prices in the international market.”
Dev said the BPC is now paying off its debts to the government and different banks.
Interestingly, as the oil prices went into free fall in the global market from last June, both the World Bank and the International Monetary Fund (IMF) urged the Bangladesh government bank to deregulate domestic oil prices and introduce a system that ensures automatic adjustment of oil prices in line with global market rates.
However, a finance ministry official said the government has no plans to lower the prices, as the country had incurred huge losses in the past. 
The government wants to recoup the losses first, the official added.  
Prof. Dr M Tamim, professor of mineral and petroleum engineering of the Bangladesh University of Engineering and Technology (BUET), told The Independent that the prices of petrol and octane should be lowered further, as the prices in the international market have been falling steadily for months.
He said the idea here that people who use petrol and octane mainly use those for private vehicles and they can afford the high prices is not appropriate nowadays because over 95 per cent of the vehicles in Dhaka run on CNG. “I don’t find that a valid reason for not lowering the prices further,” he said.
He said the excuse that the BPC has made—that it has been bearing losses for years—was premised on a misleading concept. “When the oil price was high in the international markets, the government provided subsidies through the budget to buy oil from the international markets. Ultimately, the high oil prices were paid 
with revenues. The BPC didn’t bear those losses,” he pointed out.

BPC books record profits as international oil prices fall

BPC is still making a profit of Tk 23 to Tk 28 per litre of petrol and octane and about Tk 16 in the cases of diesel and kerosene

The Bangladesh Petroleum Corporation (BPC), which has been in the red since 1999 due to soaring oil prices, has made staggering profits of Tk 7,050 crore in the outgoing fiscal year 201516. On the back of sliding global oil prices, this is a record profit that the state-owned corporation has logged since it was founded 40 years ago. The BPC has also deposited Tk 1,758 crore in the national exchequer in the outgoing fiscal year. Though the government made some price adjustments recently following demands by economists and businesses, there is still a big difference between international and local prices. On March 31, the government cut the price of furnace oil, mostly used by industries and power plants, by more than 30 per centto Tk 42 a litre. Then, on April 24, the government brought down the prices of octane and petrol by Tk 10 a litre and diesel and kerosene by Tk 3 per litre. Despite the cuts, the BPC is still making a profit of Tk 23 to Tk 28 per litre of petrol and octane and about Tk 16 in the cases of diesel and kerosene. In the last fiscal year, the BPC imported a total of 26.06 lakh tonnes of diesel, 1.37 lakh tonnes of petrol, 1.47 lakh tonnes of octane, 2.13 lakh tonnes of kerosene, 3.47 lakh tonnes of jet fuel and 7.11 lakh tonnes of furnace oil. After five consecutive years of losses, the turnaround in fortunes for the BPC came in the last fiscal year, 201415, when it made profits of Tk 4,126 crore. Before that, the BPC last logged profits of Tk 323 crore in the fiscal year 200809. The BPC was in the red every year between 200910 and 201314 as oil prices were high in the international market. During that time, oil prices were not adjusted in the local market in accordance with global prices. The losses forced the government to set aside a huge amount of taxpayers money as subsidies in its budget in those five years. The amount of money that the government set aside from taxpayers money was nearly Tk 57,000 crore, of which the government provided Tk 26,350 crore as loan. The BPC, with just its earnings in the last few years, has been able to pay off its debt of around Tk 17,300 crore to several banks. The state-owned corporation has contributed around Tk 71,000 crore to the national exchequer since its inception in 1976. Talking with The Independent, Shankar Prashad Dev, the BPCs director (finance), said the BPC has been a losing concern for several years. Because of that, no money could be channelled out for the purposes of development. Now the organisation is making profits because of the lower oil prices in the international market. Dev said the BPC is now paying off its debts to the government and different banks. Interestingly, as the oil prices went into free fall in the global market from last June, both the World Bank and the International Monetary Fund (IMF) urged the Bangladesh government bank to deregulate domestic oil prices and introduce a system that ensures automatic adjustment of oil prices in line with global market rates. However, a finance ministry official said the government has no plans to lower the prices, as the country had incurred huge losses in the past. The government wants to recoup the losses first, the official added. Prof. Dr M Tamim, professor of mineral and petroleum engineering of the Bangladesh University of Engineering and Technology (BUET), told The Independent that the prices of petrol and octane should be lowered further, as the prices in the international market have been falling steadily for months. He said the idea here that people who use petrol and octane mainly use those for private vehicles and they can afford the high prices is not appropriate nowadays because over 95 per cent of the vehicles in Dhaka run on CNG. I dont find that a valid reason for not lowering the prices further, he said. He said the excuse that the BPC has madethat it has been bearing losses for yearswas premised on a misleading concept. When the oil price was high in the international markets, the government provided subsidies through the budget to buy oil from the international markets. Ultimately, the high oil prices were paid with revenues. The BPC didnt bear those losses, he pointed out.