DHAKA: The continuous fall of oil prices in the international market has helped Bangladesh to save a staggering $1.5 to 2 billion this year.
The country’s oil importing agency Bangladesh Petroleum Corporation (BPC) that had been in the red from 1999 has started counting profits from September-October last.
If the current oil price trend continues, this will save the government from the burden of heavy subsidy to the power sector that consumes costly fuel oil. It will also create the premise for slashing prices of diesel, octane, and kerosene for the domestic market.
“We are making some good profits. All kinds of petroleum products are now profitable,” said BPC Chairman Yunusur Rahman. “But we have some backlogs,” he added.
The BPC’s cumulative loss now stands around Tk 5,000 crore; while the Biman Bangladesh Airlines owes it Tk 1,000 crore in arrears.
Due to favourable international oil prices, the BPC nowadays doesn’t need to request the government to provide it with funds to purchase oil periodically.
The government’s dependence on imported oil, specially furnace oil, shot up significantly from 2010 when it opted for a good number of oil-fired rental power plants as a short-term solution to the country’s power crisis.
While the power units helped overcome the power crisis to a large extent, it brought in huge financial pressure on the Power Development Board (PDB) that is responsible for supplying oil to the power companies.
The PDB required around Tk 5,500 to 6,000 crore subsidy annually, while the government, to offset the subsidy pressure hiked power prices several times in the last three years.
“We just need the subsidy to cover the high price of fuel,” said a PDB high official seeking anonymity.
“We know oil prices have dropped internationally and also at the domestic market in India. But till now, the government has not reduced oil prices, and we still need subsidy.”
For now, the government has no plan to reduce domestic oil prices, as it is still observing the situation.
In recent years, the country has been spending between Tk 34,000 and Tk 38,000 crore per year to import crude, refined and lube base oil.
“If oil prices continue to stay at this level, we expect to save 35 to 40 percent of last year’s oil import costs,” said the BPC Chairman.
