BPC seeks Tk 12.53b from govt as fuel subsidy

The state-run Bangladesh Petroleum Corporation (BPC) has sought over Tk 12.53 billion as subsidy fund from the government to help keep its fuel imports and supplies uninterrupted, officials have said.
The Ministry of Power, Energy and Mineral Resources recently sent a letter to the Ministry of Finance (MoF) seeking the fund.
Earlier, the BPC had sought funds from the Power Division through a letter December last, the ministry officials said.
The state entity sought over Tk 8.06 billion as deficit financing for the last five fiscal years (FYs) and over Tk 4.46 billion as operating losses for the July-September period in the last FY 2012-13, the letter said.
The Bangladesh Petroleum Corporation (BPC) has incurred a loss amounting to Tk 10.23 for each litre of diesel, and Tk 10.17 for each litre of kerosene, the letter mentioned.
The cumulative deficit of BPC stood at Tk 293.14 billion in the last five fiscal years, from FY 2008-09 to FY 2012-13. The government has given it financial support worth Tk 285.07 billion through cash and bond against the deficit. As a result, the amount of un-disbursed deficit stood at over Tk 8.06 billion, the letter added.
The government has set the amount of Tk 28.75 billion as target for fuel subsidy in the current fiscal year. It has also estimated the demand for fuel at 5.3 million litres for the current fiscal year, according to ministry sources.
Recently, the Energy Division informed the MoF that it required US$ 5.0 billion for the fiscal year 2013-14 as fuel cost, of which $1.0 billion would be required for payment as subsidy.
Currently, diesel and kerosene are selling at Tk 68 per litre, while octane and petrol at Tk 99 and Tk 96 per litre respectively. The petroleum prices were last raised in November, 2011.
The BPC, the country's lone oil importer and distributor, buys oil products from global markets at higher prices than those set on the domestic market, forcing the government to pay hefty subsidies to cover the difference, sources said.
Bangladesh's demand for fuel is growing sharply as a short supply of natural gas has forced it to turn to the expensive oil-fired power plants to resolve the problem of crippling electricity shortages, they said.
The BPC said it would continue to incur losses as the domestic prices of diesel and kerosene were still far lower than the prices they had paid to buy them from the global market.
The government took loan worth $2.6 billion from Islamic Development Bank (IDB) in FY 2011-12. The government has already taken $2.2 billion loan from IDB for fuel import in the current fiscal year.
However, the International Monetary Fund (IMF) has placed a set of conditions in releasing subsidy for fuel imports, and suggested reducing loans, for the purpose, that come from international sources.
According to the IMF conditions, the government should lower the foreign funding for fuel import to $775 million by next fiscal year against the present FY's borrowing worth $2.2 billion.
The IMF had asked the government to adjust the fuel cost, but the government was found unwilling to hike the prices during the election year.