BPC targets Tk 2.05 billion profit in August on fuel price hike


If corruption in BPC was controlled, there was no need to raise prices, say speakers at CPD seminar

| Updated:
August 11, 2022 7:15:17 PM

The Bangladesh Petroleum Corporation (BPC) has estimated that it will make a profit of about 2.05 billion taka this month (August), the first ever month of rising fuel oil prices.

The profit would come from the proceeds of diesel and octane sales only subject to the availability of U.S. dollars at the official rates for importing petroleum products, its chairman ABM Azad revealed on Wednesday during a press briefing at his office. Karwan City Bazaar.

“If our August diesel and octane sales stay similar to July’s and we get US dollars at the rates offered (officially) by the banks, we can hit the target,” he said. .

Currently, the state-owned fuel oil distribution company opens letters of credit (L/C) at the market rate of the US dollar, the chairman said, adding that the company is now making a profit of 25 taka per liter by selling oil. octane. He also makes a profit by selling gasoline, which is entirely produced locally.

A source said profit on petrol sales would be around Tk 30 per litre.

The BPC chairman claimed that the company now had about 198.82 billion taka in its accounts, which would be equivalent to less than two months of its import costs.

He noted that currently the overall PCB loss is 6 Tk per litre. On the other hand, he said, the BPC pays taxes worth Tk 20.70 per liter on diesel imports and Tk 23.5 per liter on octane imports.

He also informed that the BPC has a stock of diesel equivalent consumption over 30 days, which is 294,319 tonnes, a stock of octane over 19 days of 22,827 tonnes, a stock of gasoline over 18 days up to 19,174 tonnes and a 32-day jet fuel inventory of 35,780 tonnes. .

Mr. Azad also claimed that misleading information was being spread by different quarters about BPC’s deposits and profits, and disagreed with the report that the company made a profit of Tk480 billion in seven years, from 2014-15 to 2020-21.

He said the BPC had made a profit of around 420 billion taka, but had to spend half of it to import petroleum products at higher prices on the international market.

Meanwhile, speakers at a seminar earlier in the day said that BPC had already started making profits on the first day of the August 6 oil price hike.

The local think tank Center for Policy Dialogue (CPD) organized the seminar entitled “Could the unprecedented rise in fuel prices be avoided now? at his city office. CPD Executive Director Dr. Fahmida Khatun delivered the keynote address.

If BPC’s corruption, theft and mismanagement could be controlled and efficiency improved, there was no need to raise prices at that time all of a sudden, the CPD observed.

He said the price of octane per liter in Bangladesh is 10 Tk higher than the price in neighboring India, while the price of diesel per liter is 2.0 Tk higher.

The price of octane is 29 Tk higher and diesel 16 Tk higher than Vietnam, which is Bangladesh’s biggest competitor in the global ready-to-wear (RMG) market.

US octane price is 23.20 Tk lower than Bangladesh, CPD said, urging government to reverse fuel price hike decision and said its impact will have effects multipliers on the economy.

“Rising fuel prices will drive current inflation from 7.5% to an even higher level,” Dr Khatun said.

Former Agriculture Secretary Anwar Faruque said that due to the impact of rising fuel prices, the cost of producing rice will increase by Tk 1,000 per bigha and finally, the price of rice coarse will increase to 60 Tk per kg in the next season.

In this consideration, the cost of rice production per hectare will increase by Tk 4,000, said Mr. Faruque, who was speaking at the event as an agriculture specialist.

He demanded an immediate announcement on the price to buy rice from the government for the next Boro season. “Otherwise, farmers will not feel encouraged to produce rice for fear of incurring a loss, which will ultimately undermine the country’s food security,” he explained.

“I’m sure BPC is already making a profit on oil sales,” said energy expert Professor Ijaz Hossain.

He said the government’s higher oil price hike indicated that the government was no longer interested in providing subsidies to the oil sector, which was very common before.

Raising oil prices during the “worst” time in the country’s history is tantamount to imposing an indirect tax on commoners to raise government revenue, which consumers are required to pay, he said.

“It will be wise to introduce a formula and adjust the fuel price through the Bangladesh Energy Regulatory Commission (BERC),” he added.

He said the energy regulator bears the responsibility, that consumers remain willing to pay higher prices when the world price rises and will benefit from lower prices when it falls.

“If India can adjust fuel price according to the global market trend, why can’t Bangladesh?” he asked.

Deputy Chairman of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Fazle Shamim Ehsan, said the rising diesel price is a double whammy for entrepreneurs.

“We industrialists were using diesel to ensure uninterrupted production because the government was unable to provide enough natural gas with the pressure to run our factories,” he said.

Businessmen will have to arrange their own subsidies to pursue their business activities accordingly, he added.

“We will also have to increase the wages of our employees to keep them engaged in our industries,” he said, adding, “Otherwise they will go home due to the rising cost of living.”

Export orders are already on a downward trend over the past two months, he said.

Bangladesh’s Secretary General Jatri Kalayan Samity, Mozammel Haque Chowdhory, said the monthly transport expenditure per passenger would reach Tk 6,000 due to fare hikes in the wake of rising oil prices.

CPD Research Director, Dr. Khondaker Golam Moazzem claimed that there is no transparency and accountability within the BPC which has a deposit of over Tk 250 billion with different banks.

“Despite such large deposits, why did they have to raise oil prices when everyone is under economic pressure due to the high rate of inflation,” he asked.

The government has increased the prices of refined petroleum products by up to 51.68% with effect from August 6.

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