BPC hopes to make profits in 2019

Fall in oil prices in world market creates the scope

There is good news for the government in the new year as the country will again benefit from the downtrend in international oil prices. After suffering immense losses in the oil market last year, the Bangladesh Petroleum Corporation (BPC) is finally looking to book profits. In the past three months, oil prices in the world market have fallen by as much as 40 per cent. The BPC has made profits of Tk. 5 on each litre of diesel. Every month, profits stand at more than Tk. 100 crore. Again, the BPC has reportedly delayed the banks from opening letters of credit (LCs). “As regards the LCs, the BPC interfered with the power, energy and mineral resources ministry several times. The ministry has already sent a letter to the Bangladesh Bank (BB) on this issue,” disclosed an official of the ministry on condition of anonymity.

Sources said Sonali Bank and Agrani Bank respectively approved USD 18 million to the BPC on December 27, which has not been executed yet.

Besides, the BPC faces losses of Tk 1.5 to Tk. 2 per litre of furnace oil.

The BPC has continuously suffered massive losses from November 2017 to October 2018. In March and April 2018, it stared at losses of some Tk. 300 crore in a month, said sources.

In February 2018, the BPC sought a 31 per cent hike in the price of furnace oil to Tk. 55 per litre.

In February, the BPC incurred losses of around Tk. 100 million on a daily basis as the price of Brent crude in the global market was hovering around USD 70 per barrel. The Brent crude price is USD 54 now.

The loss was Tk. 9.80 per litre of furnace oil, Tk. 5.24 for diesel and Tk. 4.74 for kerosene, when the January 2018 oil prices are taken into account globally.

Sources in the Energy Division told The Independent that just a few days back, the cost of diesel was not profitable. But nowadays, the international prices are favouring the BPC, which is now making profits. This should come as a boon for the new government.

“A quantity of 30,000 tonnes of refined diesel had cost us about USD 25 million. But now the cost has come down to USD 18 million. You just see the savings,” said a BPC official.

Bangladesh consumes 69,48,336 tonnes of petroleum products. Of this, diesel consumption amounts to 48,35,712 tonnes.

The dollar crisis is a source of further tension for the BPC. “To open an LC of USD 10 to 18 million, we have to request the Energy Division, the Finance Division, the Bangladesh Bank and the state-owned banks. This is really tough for anyone,” said a BPC official.

However, there is hardly any scope to reduce oil prices.

The BPC official said: “In the last nine months, we have suffered huge losses and we plan to recoup the losses. Otherwise, we will be in a soup in the future.”  

On April 24, 2016, the government cut the retail prices of furnace oil, diesel, kerosene, octane and petrol per litre to Tk. 42, Tk. 65, Tk. 65, Tk. 89 and Tk. 86 respectively as global oil prices hit rock-bottom. The rates are still in effect in the domestic market.

After booking hefty profits over the past three years—since late 2014—the BPC started logging losses since November 2017 over the rising prices globally.

It booked profits of Tk. 42.12 billion during the 2014–15 fiscal year (FY), Tk. 63.42 billion in FY16 and Tk. 43.99 billion in FY17, according to BPC statistics.

In FY19, the BPC might have to import around 7.5 million tonnes of different petroleum products. It has sought Tk. 85 billion from the finance ministry to foot oil import bills in FY19.

 

 

BPC hopes to make profits in 2019

Fall in oil prices in world market creates the scope

There is good news for the government in the new year as the country will again benefit from the downtrend in international oil prices. After suffering immense losses in the oil market last year, the Bangladesh Petroleum Corporation (BPC) is finally looking to book profits. In the past three months, oil prices in the world market have fallen by as much as 40 per cent. The BPC has made profits of Tk. 5 on each litre of diesel. Every month, profits stand at more than Tk. 100 crore. Again, the BPC has reportedly delayed the banks from opening letters of credit (LCs). As regards the LCs, the BPC interfered with the power, energy and mineral resources ministry several times. The ministry has already sent a letter to the Bangladesh Bank (BB) on this issue, disclosed an official of the ministry on condition of anonymity. Sources said Sonali Bank and Agrani Bank respectively approved USD 18 million to the BPC on December 27, which has not been executed yet. Besides, the BPC faces losses of Tk 1.5 to Tk. 2 per litre of furnace oil. The BPC has continuously suffered massive losses from November 2017 to October 2018. In March and April 2018, it stared at losses of some Tk. 300 crore in a month, said sources. In February 2018, the BPC sought a 31 per cent hike in the price of furnace oil to Tk. 55 per litre. In February, the BPC incurred losses of around Tk. 100 million on a daily basis as the price of Brent crude in the global market was hovering around USD 70 per barrel. The Brent crude price is USD 54 now. The loss was Tk. 9.80 per litre of furnace oil, Tk. 5.24 for diesel and Tk. 4.74 for kerosene, when the January 2018 oil prices are taken into account globally. Sources in the Energy Division told The Independent that just a few days back, the cost of diesel was not profitable. But nowadays, the international prices are favouring the BPC, which is now making profits. This should come as a boon for the new government. A quantity of 30,000 tonnes of refined diesel had cost us about USD 25 million. But now the cost has come down to USD 18 million. You just see the savings, said a BPC official. Bangladesh consumes 69,48,336 tonnes of petroleum products. Of this, diesel consumption amounts to 48,35,712 tonnes. The dollar crisis is a source of further tension for the BPC. To open an LC of USD 10 to 18 million, we have to request the Energy Division, the Finance Division, the Bangladesh Bank and the state-owned banks. This is really tough for anyone, said a BPC official. However, there is hardly any scope to reduce oil prices. The BPC official said: In the last nine months, we have suffered huge losses and we plan to recoup the losses. Otherwise, we will be in a soup in the future. On April 24, 2016, the government cut the retail prices of furnace oil, diesel, kerosene, octane and petrol per litre to Tk. 42, Tk. 65, Tk. 65, Tk. 89 and Tk. 86 respectively as global oil prices hit rock-bottom. The rates are still in effect in the domestic market. After booking hefty profits over the past three yearssince late 2014the BPC started logging losses since November 2017 over the rising prices globally. It booked profits of Tk. 42.12 billion during the 201415 fiscal year (FY), Tk. 63.42 billion in FY16 and Tk. 43.99 billion in FY17, according to BPC statistics. In FY19, the BPC might have to import around 7.5 million tonnes of different petroleum products. It has sought Tk. 85 billion from the finance ministry to foot oil import bills in FY19.