Profits of state enterprises fall to 9-year low

The profits of state-owned enterprises in Bangladesh fell to their lowest in nine years, owing to higher commodity prices in the global market and selling of essentials among the poor and low-income groups at subsidised rates.

The net profit of 49 state-run companies and corporations slumped 81 per cent  year-on-year to Tk 2,867 crore in the outgoing fiscal year.

This compared to Tk 15,159 crore recorded a year ago, according to the Bangladesh Economic Review 2022 released last week.

The full-year projection was made on the basis of the data available as of May.

The review showed 11 companies posted higher profits in FY22 and a similar number of SoEs turned unprofitable, a record in recent times.

Among the companies, the Bangladesh Telecommunication Regulatory Commission made the highest profit of Tk 2,651 crore, albeit a decrease of 20 per cent from a year ago.

Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) came second after netting Tk 698 crore in profits.

Its profit declined by 17 per cent from the previous fiscal year, driven by higher prices of liquefied natural gas (LNG) in the global spot market.

The price of the super-chilled fuel has gone up by four to five times owing to the global energy crisis, led by pent-up demand, supply disruptions and the Russia-Ukraine war.

Amid widening losses, Petrobangla had proposed the Bangladesh Energy Regulatory Commission (BERC) hike gas prices, saying it would face a huge loss if prices are not adjusted in line with the global rates.

Subsequently, the BERC hiked the gas price by 22.78 per cent.

The Bangladesh Power Development Board (BPDB) returned to the red after it lost Tk 1,895 crore in FY22, the highest among the SoEs.

"This is due to the higher price of oil and gas in the international market," said an official of BPDB.

In the past decade, BPDB made a profit only in 2019-20 and 2020-21.

Rajshahi Wasa posted a profit in the outgoing fiscal year while the profit of Dhaka, Chittagong and Khulna Wasa declined.

The profit of the Civil Aviation Authority of Bangladesh fell by 43 per cent to Tk 209 crore, owing to the suspension of international travels and a decrease in domestic flights because of the pandemic-induced border closures.

As a result, the aviation administration faced a massive drop in the collection of revenue in the form of embarkation fees, aerodrome charges, route navigation charges, and other aeronautical and non-aeronautical charges.

For the Trading Corporation of Bangladesh (TCB), the loss swelled by more than 283 per cent to Tk 1,158 crore in FY22, according to the provisional data. It was Tk 302 crore last year.

The losses stemmed from the sales of items such as rice at lower than the market prices throughout the pandemic period in order to keep the market stable and help the low-income consumers, who have been hit hard by higher inflation.

The Chittagong Port Authority's profit surged 25 per cent year-on-year to Tk 636 crore, on the back of abnormally high imports as the economy recovered from the pandemic-induced slowdown.

Bangladesh Jute Mills Corporation narrowed losses to Tk 308 crore in FY22, from
Tk 406 crore registered in the last fiscal year.

The stock market regulator, Bangladesh Securities and Exchange Commission, returned to profit.

It raked in Tk 53 crore, recouping from a loss of Tk 14.68 crore in the previous year, the only year it was in the red.

Bangladesh Sugar and Food Industries Corporation incurred a loss of around Tk 882 crore.

The Bangladesh Economic Zones Authority took home Tk 289 crore, despite a dip of 36 per cent, and the Bangladesh Land Port Authority made a profit of Tk 107 crore, a 15 per cent decline.

The loss of the Bangladesh Road Transport Corporation stood at Tk 100 crore, down from Tk 120 crore a year ago.

The Rajdhani Unnayan Kartripakkha nearly doubled its profit to Tk 214 crore in FY22 from Tk 136 crore in FY21.

Zaid Bakht, a former research director of the Bangladesh Institute of Development Studies, said there was no reason for the profit of SoEs to go down since economic activities have rebounded from the pandemic in the ongoing fiscal year compared to a year ago.

The price of essential commodities has rocketed in the international market, forcing the TCB to sell items at a significantly subsidised rate, he said.