The government pledged a 'fool-proof' fiscal management at the Bangladesh Petroleum Corporation (BPC) by 2014 to secure the loan of the International Monetary Fund (IMF) under its extended credit facility (ECF), a top official said.
It pledged to hire professional people for the BPC financial management by March next and introduce software for automated financial reporting for the BPC by December next, he said.
The government made the commitments months after the Anti Corruption Commission (ACC) had sued six BPC officials over misappropriation of Tk 4.74 billion (474 crore).
The ACC accused the BPC officials of paying more money to the oil suppliers than the quantity of fuel received violating contracts.
The IMF disbursed $140.4 million in December last following its third review held under the ECF arrangement with Bangladesh.
The government also committed to keep the domestic average fuel prices within Tk 10 per litre of international prices and adjust the prices as needed to maintain that target, said the official. It also pledged to continue making regular budgetary transfers to the state-owned BPC to cover subsidy costs, he added.
In line with the commitment it will raise the domestic oil product prices whenever the BPC's losses exceed the targeted amount so that it can closely reflect international oil prices.
It was, however, unclear how the raise in domestic prices would be calculated based on that pricing reform, but it would depend on the movement of international prices, the official added.
The government currently fixes the domestic fuel prices through an executive order with no base of pricing in place.
Bangladesh is committed to implementing a set of fiscal and budgetary reforms under the deal with the IMF signed in April 2012.
In order to receive the total loan of $ 987 million from the IMF under the ECF, the government was required to introduce a price reform for domestic oil products that would reflect international oil prices.
The BPC, the country's fuel import and marketing monopoly, purchases oil products from the international market and sells at lower rates in the domestic market, resulting in significant losses.
In the latest bid to offset the losses faced by the BPC, Bangladesh raised the domestic prices of diesel, kerosene, petrol and octane by almost 12 per cent in January, 2013. BPC's losses had reached Tk 18-19 per litre at that time, which prompted the increase in prices.
Currently the BPC is incurring a loss of around Tk 10 per litre against the diesel and kerosene trade. It does not incur any loss in petrol and octane trade.
Prices of diesel and kerosene were hiked by Tk 7 per litre and petrol and octane prices by Tk 5 per litre then.
Following that hike, diesel and kerosene now cost Tk 68 per litre, petrol Tk 96 per litre and octane Tk 99 per litre. The price of furnace oil is Tk 60 per litre.
BPC has finalised term contracts with suppliers to import around 3.74 million tonnes of refined oil products in 2014.
Of the total, 2.70 million tonnes are diesel, 700,000 tonnes are furnace oil, 300,000 tonnes are jet A-1 fuel, 30,000 tonnes are octane and 10,000 tonnes are kerosene.
The BPC also expects to import around 1.40 million tonnes of crude oil from Saudi Aramco and Abu Dhabi National Oil Company in 2014.
The BPC currently has term deals on import of refined products with Kuwait Petroleum Corp., Petco, the trading arm of Malaysia's state-owned Petronas, the Philippine National Oil Co., Emirates National Oil Co., Egypt's Middle East Oil Refinery, Maldives National Oil Co., the state-owned PetroChina, and Indonesia's Bumi Siak Pusako.
It also has deals in place on import of crude oil with Saudi Aramco and the Abu Dhabi National Oil Co.
Govt pledges fool-proof BPC fiscal management
M Azizur Rahman | Published: January 23, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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