SIDR compounds govt's woes in footing fuel import bills

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M Azizur Rahman
The powerful cyclone Sidr, that struck the country's southern and coastal districts recently, has further compounded the government's predicament in allocation of funds for payment against fuel imports as petroleum prices keep rising in the international market.
"The government is now in a dilemma in coping with the mounting fuel prices in the international market and containing the losses of the cash-strapped Bangladesh Petroleum Corporation (BPC)," a senior official of the Energy and Mineral Resources Division (EMRD) told the FE.
He said the finance ministry is yet to respond to the EMRD's appeal to allocate Tk 50 billion (5,000 crore) for payment against fuel imports for the current fiscal year.
Besides, the government's arrangement of loans worth $300 from three banks - Janata, Sonali and Agrani - will be completed by December next, he said.
In the first four months of the current fiscal until October last, the BPC incurred losses amounting to over Tk 10 billion as the global oil price kept mounting.
The BPC's monthly loss has already exceeded Tk 2.50 billion as the corporation has to import fuels at international prices and sell those at the fixed and subsidised government rate.
"This loss may be even bigger next month if the current uptrend in prices of petroleum products continues in the international market," the EMRD official said.
To bail out the BPC from huge debts, the government has planned to assume the state-run corporation's accumulated loans worth Tk 75.23 billion as its own liability by issuing bonds of equivalent amount.
But the rising prices of petroleum products might push up the BPC's liabilities to a new height, a senior BPC official feared.
Sources said petroleum prices are now hovering around US$ 100 a barrel in the international market, up by $33 a barrel compared to the prices in April last, when the government increased the petroleum prices in the latest.
"Despite April's hike in petroleum prices, the BPC is now counting a loss of over Tk 20 per litre for diesel and Tk 21 per litre for kerosene," he said.
Energy officials said a fresh hike is again overdue, but the government keeps the decision on hold for now in the face of the rising inflation and price hike of essentials.
They said the BPC is now bearing the brunt of the volatile international market as the government is neither adjusting the prices with the international market nor making any commitment to give subsidy.
In a bid to adjust the domestic oil prices with the international market the government several months ago constituted an eight-member permanent fuel oil price fixation committee to monitor oil prices in the international market and adjust prices in the local market.
But the committee is yet to meet in this connection, it was alleged.
In the latest hike in April 2007, the government raised the prices of petroleum products between 15 and 21 per cent aiming to offset the impact of the overheated international oil market on the domestic economy.
As per the latest price adjustment, the price of octane is now Tk 67 per litre, petrol Tk 65 per litre, while the price of both diesel and kerosene is Tk 40.