BPC counts Tk12cr loss daily for higher diesel price

The government is counting a loss of Tk 12.40 crore per day in selling diesel to customers as the price of the most-consumed fuel in Bangladesh is on the rise in the global markets.

State-run Bangladesh Petroleum Corporation (BPC), the lone importer, processor and supplier, loses Tk 8.72 while selling each litre of diesel.  

The price of diesel has been going up in the global market for about a month now.

Diesel was sold at $87.95 per barrel on freight on board basis on January 3 in the Arab Gulf market. It rose to $108.24 per barrel on February 7.

Not only diesel fuel, but the price of all other petroleum products is also showing an upward trend. 

Many countries are stockpiling diesel because of the recovery in demand as the impacts of the coronavirus pandemic are fading away, as well as the Russia-Ukraine tension, said analysts. 

If the current upward trend of the diesel price goes on, it may go up to $115 per barrel towards the end of February. This may widen losses for the BPC.

Speaking to The Daily Star, BPC Chairman ABM Azad said: "It is a matter of concern the way the oil price is going up in the international market. The BPC will be in trouble if the price goes up further."

In order to keep the supply smooth, the BPC is being compelled to import diesel at a higher price.

Bangladesh consumed about 63 lakh tonnes of fuel oil last fiscal year. It may go up to 67.50 lakh tonnes in the current fiscal year as the economy is making a turnaround from the coronavirus pandemic. 

Of the fuel consumption, 46 lakh tonnes were diesel, 5.59 lakh tonnes furnace oil, 3.78 lakh tonnes petrol, 3 lakh tonnes octane, and 1 lakh tonnes kerosene, according to BPC officials.

On average, 15,000 tonnes of diesel is sold in Bangladesh every day, up from 14,900 tonnes in February last year.

The BPC is facing a loss anew.

The government raised diesel price by Tk 15 per litre on November 4 when crude oil was selling at $85 per barrel in the international market, sources at the energy ministry said. 

The move was aimed at recovering the losses of the state-run agency from the surging global energy prices. Before the hike, the BPC was losing about Tk 20 crore per day.

BPC was at break-even on January 11 when diesel was selling at $94 per barrel in the global market. It began incurring losses when the price shot up above $95.57 per barrel the following day. 

Globally, the oil price is rising due to strong demand, ongoing tensions in Eastern Europe and potential supply chain disruptions due to cold US weather conditions, said Reuters yesterday.

Brent crude hit a seven-year high of $94 per barrel on Monday.

According to Platts Asia Pacific/Arab Gulf Marketscan, the price of octane went up to $105.12 per barrel on February 7 from $90.04 on January 3.

Jet fuel price shot up to $104.16 per barrel from $84.33 and furnace oil price rose to $524.01 per tonne from $445.62 during the period.

Kazi Mohammad Mozammel Hoque, director for finance of the BPC, says as diesel accounts for 73 per cent of the fuel oil used in Bangladesh, the loss is high because of higher consumption.