The country's fuel import bill is set to soar 50 per cent to a record US$6 billion in the next financial year, as the government's short-term solution to power crisis exacts a toll on the economy. Bangladesh Petroleum Corporation (BPC) -- the country's lone fuel importer and distributor -- has said oil subsidy in the 2011-12 fiscal could jump to $2.5 billion if the prices are not adjusted in line with the global hikes. The corporation made the prognosis ahead of the budget, saying its monthly loss due to the difference between fuel sale price and import bill has soared Tk 16 billion ($222 million) and it could spike if crude price surges in international market. "In the current financial year to June our fuel import cost is estimated to stand at four billion dollars. Next fiscal year the import bill will soar to six billion dollars," said Muktadir Ali, chairman of BPC. The estimate has been done keeping the base price of crude oil at 112 dollars per barrel in the international market. Ali said a raft of new diesel and furnace oil-fired power plants, rising crude prices and expansion of diesel-powered irrigation have pushed up fuel import bill. An acute gas crisis stemming from lack of new discoveries added significantly to the cost, as it has forced the government and the private sector to set up diesel and furnace oil-based power plants to generate power, he said. According to the state-owned Petrobangla, Bangladesh's daily gas demand has risen to 2,500 million cubic feet against the supply of 2,000 mcf. "Even a few years ago some 95 per cent of the country's electricity was generated by gas-fired power plants with the entire supply coming from local gas-fields," he said. Liquid fuel-generated electricity made up 15 per cent of the supply in recent months and its share in total power generation would rise significantly as more diesel and furnace power plants hit upstream, said PDB spokesman Saiful Islam. The government wants to get rid of power crisis at any cost by 2012, despite warnings by the World Bank that the short term solution could pose a threat to the government fiscal deficit. Plants are being set up to add another 1000 megawatt power in the next seven months -- most of it through burning liquid fuel. BPC officials said the country would need to import five million tonnes of diesel, 2.28 million tonnes of furnace oil next year -- both clocking some 30-40 per cent increase. An expansion of diesel-run irrigation across the country has also caused headache for the government and the BPC officials. In January this year -- at the height of Boro rice cultivation -- diesel use in irrigation purposes has climbed 33 per cent year-on-year, according to the BPC. The corporation also predicts a 10 per cent increase in octane, petroleum and jet fuel use next year, as demand soar in pace with high economic growth. It plans to sell 100,000 tonnes of octane, 350,000 tonnes of petrol and 350,000 tonnes of jet fuel next year. Last month global oil prices jumped to around 120 dollars on supply concerns from the troubles-wracked Middle East. But this week, oil prices have come down with New York's main contract, light sweet crude for July delivery trading at around $98 barrel, while, Brent North Sea crude for July delivery at $110.71. The country's oil import bill remained stagnant at $3 billion throughout last decade, thanks largely to use of local gas as the main fuel to generate power and drive cars, buses and lorries.
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