Petroleum prices kept unchanged for March

FE REPORT

The government has kept unchanged the prices of diesel and kerosene at Tk105 per litre, octane at Tk126 per litre and petrol at Tk 122 per for the month of March under the automatic fuel pricing formula.

Petroleum prices have been kept unchanged to those similar to February level to ensure supply of such items at reasonable prices, an order of the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) stated on Saturday.

The EMRD also published a gazette over the petroleum prices for March.

The government first introduced the automatic fuel pricing formula on March 7, 2024.

The government usually applies Platts's oil product assessments or benchmarks for fixing refined oil products and for crude oil it look at S&P Global Platts's Dated Brent benchmark while buying petroleum products from the international market.

Sources said the new oil pricing formula is aimed at ensuring no loss no profit for state-run Bangladesh Petroleum Corporation (BPC).

The BPC in February last year prepared a guideline on automatic oil pricing under which the prices of all petroleum products will be fixed.

Under the guideline, all types of costs including international market price, import tax, advance income tax and value added tax, or VAT, operational expense, administrative and maintenance costs, BPC's margin, and distributor's margins would be added before fixing the prices of petroleum products.

Prices of octane and petrol are considered as luxury fuel, under the guideline, and hence their prices should be kept always higher than diesel, it narrated.

The price difference between octane and diesel should be at least Tk10 per litre in domestic market, it spelled out.

Bangladesh usually imports around 300,000 tonne octane annually to meet domestic demand, while the demand of petrol is made through production from the country's lone crude oil refinery - Eastern Refinery Ltd (ERL), and from condensate fractionation plants.

Since independence in 1971, Bangladesh has been fixing domestic petroleum product prices through executive orders by the government.

The BPC would attain profit from petroleum product trading in most of the years and provide dividend to the government after clearing all debts and liabilities including taxes and VATs.

The ministry of finance would provide subsidy when the BPC incurred loss in petroleum product trading when oil prices in international market were high and volatile.

Bangladesh introduced the automatic oil pricing formula for the first time in line with a recommendation from the global lender -- International Monetary Fund, or IMF.

It was among several conditions for reduction of subsidies as set by the IMF for a US$4.7 billion loan.

Azizjst@yahoo.com