BPC asked to reassess losses after sharp decline in global oil price

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Shakhawat HossainbrThe finance ministry Wednesday asked the state-owned Bangladesh Petroleum Corporation (BPC) to reassess its losses in the wake of a sharp fall in oil price in the international market, officials said.brThe directive was given after the ministry has said it expects a major cut in its losses and subsidies on sale of petroleum products due to around 25 per cent cut in oil prices since July. brThe BPC had earlier projected a total subsidy of around Tk 100 billion in fuel, as its administered prices in the local market is far lower than the import cost. brWe told the BPC to make a new projection on its losses. We expect the losses would be much less than its earlier projection, a senior finance ministry official said, speaking on condition of anonymity. brWe are keeping a sharp watch on global oil market. We think the prices would continue to fall in the coming months, he added.brHe made the comments after the top finance ministry officials held a meeting with the BPC at the secretariat on the day.brChairman of the BPC Anwarul Karim told the meeting that despite the fall, his organisation was still counting a monthly loss of some Tk 5.0 billion, added the official. brKarim could not be contacted for a comment. brFinance ministry officials said the reassessment of BPC losses have become essential for proper utilisation of the budgetary allocation worth Tk 60.00 billion earmarked for the oil subsidy in the current fiscal.brThe ministry made the budgetary allocation based on the price of crude oil at $120 per dollar. brOn Wednesday fuel oil price slid more than 25 per cent from its July 11 record of $147.27 to be traded around $107.brThe ministry has already disbursed Tk 11.00 billion to the BPC to finance the country's oil import bill for the months of July and August.brIt is unlikely to make further disbursement for oil subsidy until the reassessment was made. brIn a latter to the finance ministry last month, BPC said it was facing a trade gap of some Tk 22.00 billion in the first quarter of the of the current fiscal year.brThe BPC had earlier projected losses of Tk 7.37 billion in July, Tk 5.6 billion in August and Tk 9.59 billion September.brOn an average Bangladesh needs to import 85,000 barrel of refined and crude oil a day and its monthly import cost has been projected around Tk 34.00 billion during the period. brIn the 2007-8 fiscal year, the BPC spent around $3.1 billion to import 3.7 million tonnes of oil, some 75 per cent of which was refined diesel. The amount was at least $1.0 billion higher than the previous year.brThe corporation has put its total losses in the outgoing fiscal at around $900 million, with the government providing Tk 60 billion as direct subsidy.br