Good times running out for BPC
Higher import prices squeezing out profit
SHAHED SIDDIQUE
The Bangladesh Petroleum Corporation (BPC) has started feeling the heat, with oil prices beginning to rise in international markets, sources told The Independent. The state-run oil importer-marketer is seeing higher import bills chip away at its profit, which had surged with sharp drops in global oil prices.
An official at the BPC, who does not wish to be identified, told The Independent that the BPC had booked a record profit, worth Tk 7,050 crore, in the last financial year. This time, profit could be much less because of higher purchase prices.
Right now, we are booking only a marginal profit compared to last year. If international oil prices go up further, the BPC could again end up in the red, the official said.
When asked, BPC chairman Abu Hena Md Ranmatul Mumeem declined to comment on this issue. Nasrul Hamid, state minister for energy, had recently told reporters that the government has no plans to reduce the price of fuel oil, as prices in global market are on the rise. He added that the World Bank has predicted this trend to continue for the next one year.
The BPC official said the import price of furnace oil is now higher than the selling price. As a result, the BPC now loses Tk 3 per litre of furnace oil. However, diesel still remains profitable for the company.
According to the invoice for a consignment of 32,000 tonnes of diesel, which was cleared on January 17, 2017, the import price stood Tk 58 per litre. This includes 57 per cent VAT and import duty. The selling price for the same is Tk 64 per litre at filling stations. For the above consignement, the BPC had shelled out USD 15.45 million to the supplier. The price for a similar consignment was USD 14.50 million just two months back, said a BPC official. In January 2016, the BPC had paid USD 28 per barrel, which now stands at USD 65, the official added.
As per OPEC data, crude was priced at USD 40 on November 1, 2016. On January 18, 2017, the price was USD 52.22. BPC imports refined oil, which is priced higher than crude oil. Experts said OPECs decision and current global situations are triggering the spike in oil prices.
Though the government has made some price adjustments recently following demands from economists and businesses, there is still a big difference between international andlocal 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 byTk 10 a litre, and diesel and kerosene by Tk 3 per litre.
In the last fiscal year, the BPC had imported 26.06 lakh tonnes of diesel, 1.37 lakh tonnes of petrol, 1.47 lakh tonnes ofoctane, 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 fortune for the BPC came in the fiscal year 2014-15, when it posted a profit of Tk 4,126 crore.
Before that, the BPC had last posted a profit worth 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 remained high in the international market.
During this period, the government did not revise domestic retail prices according to the global rates so as to keep the prices affordable.
The resulting losses forced the government to set aside a huge amount of taxpayers money as subsidies in its budgets for those five years.
