BPC seeks Tk 100b govt fund to offset its operational losses
S M Jahangir | Thursday, 31 July 2008
The Bangladesh Petroleum Corporation (BPC) has turned to the government for funds amounting to Tk 100 billion for the current fiscal year to offset its probable operational losses on account of selling fuel oils at a price lower than the import cost, official sources said.
Even after the recent upward adjustment of fuel oil prices at the domestic market, the BPC's overall operating losses has been estimated to be $ 1.5 billion equivalent to Tk 100 billion for this fiscal.
"Taking the possible deficit into account, a Tk 100-billion funding support has been sought from the finance ministry for helping the state-run BPC foot its fuel-oil import bills, and also service its debts," a senior Energy Division official said.
The official, however, mentioned that the BPC's total loss might be lower than the anticipated amount if the current declining trend in the global fuel prices persists.
International news agencies reported that oil price has fallen more than $23 a barrel, or 16 percent, since peaking on July 3, saying that crude oil prices continued to decline, falling 2.5 per cent, to $122.19 a barrel on Tuesday, their lowest level since the beginning of May.
According to the Energy Division officials, the Corporation is expected to raise an additional Tk 70 billion for the current fiscal through selling petroleum oils at the domestic market following the latest price adjustment of petroleum oils.
On June 30, the government raised the prices of petroleum products by 33.84 per cent to 50 per cent in order to help reduce the ever-growing operating losses of the BPC.
An abnormal rise in prices of petroleum oils in the global market had necessitated the government to readjust their marketing prices at the domestic level.
The Corporation is expected to get around $ 3.0 billion from sales of petroleum oils for the current fiscal while the amount was over $ 2.0 billion in the fiscal year 2007-08, they said.
On the other hand, the BPC's total cost for import of petroleum products is likely to be around $ 4.5 billion this fiscal provided the global prices remains at the present level.
Currently, the BPC requires importing around 3.68 million tonnes of petroleum oils annually, sources mentioned.
Apart from its proposed funding support from the government, the Corporation will have to turn to donors both for footing fuel-import bills and also servicing its debts.
Official sources said the BPC is looking for an increased volume of fund from its main lender -- the Islamic Development Bank (IDB) -- for the current fiscal.
Last fiscal year, BPC received fund to the tune of over $ 1.0 billion from the Jeddah-based multilateral donor IDB, an official said, adding that the Bank has already pledged $1.5 billion worth of credit for the current fiscal.
Meanwhile UNB adds, the country's octane and petrol consumption has declined by about 50 per cent due to introduction of CNG in the motor vehicles, BPC officials said.
A top official of the BPC said that this sharp fall in the use of octane and petrol was taking place from first week of the current month when the government raised the prices of all petroleum products by about 35 percent on July 1.
"We've been watching that the BPC's monthly sale of octane and petrol has come down to half from beginning of the month after the increase in the prices," he told UNB.
Even after the recent upward adjustment of fuel oil prices at the domestic market, the BPC's overall operating losses has been estimated to be $ 1.5 billion equivalent to Tk 100 billion for this fiscal.
"Taking the possible deficit into account, a Tk 100-billion funding support has been sought from the finance ministry for helping the state-run BPC foot its fuel-oil import bills, and also service its debts," a senior Energy Division official said.
The official, however, mentioned that the BPC's total loss might be lower than the anticipated amount if the current declining trend in the global fuel prices persists.
International news agencies reported that oil price has fallen more than $23 a barrel, or 16 percent, since peaking on July 3, saying that crude oil prices continued to decline, falling 2.5 per cent, to $122.19 a barrel on Tuesday, their lowest level since the beginning of May.
According to the Energy Division officials, the Corporation is expected to raise an additional Tk 70 billion for the current fiscal through selling petroleum oils at the domestic market following the latest price adjustment of petroleum oils.
On June 30, the government raised the prices of petroleum products by 33.84 per cent to 50 per cent in order to help reduce the ever-growing operating losses of the BPC.
An abnormal rise in prices of petroleum oils in the global market had necessitated the government to readjust their marketing prices at the domestic level.
The Corporation is expected to get around $ 3.0 billion from sales of petroleum oils for the current fiscal while the amount was over $ 2.0 billion in the fiscal year 2007-08, they said.
On the other hand, the BPC's total cost for import of petroleum products is likely to be around $ 4.5 billion this fiscal provided the global prices remains at the present level.
Currently, the BPC requires importing around 3.68 million tonnes of petroleum oils annually, sources mentioned.
Apart from its proposed funding support from the government, the Corporation will have to turn to donors both for footing fuel-import bills and also servicing its debts.
Official sources said the BPC is looking for an increased volume of fund from its main lender -- the Islamic Development Bank (IDB) -- for the current fiscal.
Last fiscal year, BPC received fund to the tune of over $ 1.0 billion from the Jeddah-based multilateral donor IDB, an official said, adding that the Bank has already pledged $1.5 billion worth of credit for the current fiscal.
Meanwhile UNB adds, the country's octane and petrol consumption has declined by about 50 per cent due to introduction of CNG in the motor vehicles, BPC officials said.
A top official of the BPC said that this sharp fall in the use of octane and petrol was taking place from first week of the current month when the government raised the prices of all petroleum products by about 35 percent on July 1.
"We've been watching that the BPC's monthly sale of octane and petrol has come down to half from beginning of the month after the increase in the prices," he told UNB.