BPC's predicament
Thursday, 25 October 2007
THE predicament that Bangladesh Petroleum Corporation (BPC) faces now, more particularly after the recent surge of oil-price in the international market, can easily be appreciated by all concerned. The domestic sale prices of oil products are much below than those that the BPC has to pay for importing both crude and refined oil. The fuel price adjustments that were implemented last April reduced BPC's losses, bringing domestic prices of diesel and kerosene to 83% of break-even in June last. The BPC had then been selling other products at profit. The government has announced through the national budget for fiscal 2007-08, that it will assume BPC's overdue bank loans through a bond issue of $1.1 billion. That has been a desirable move.
But petroleum prices in the international market have shown an ascending pattern, lately again. In the recent days, the international market rate for per barrel of crude oil shotup to US $ 88 and that for refined oil, to above $ 90. This has led to fresh pressures on the BPC's finances. One would like to note here that the country's annual import bill on account of both crude petroleum and POL (petroleum, oil and lubricants) rose to $2213 million in fiscal 2006-07 from $2004 million in fiscal 2005-06 and $1603 million in fiscal 2004-05. If the present uptrend in international oil prices continues, the import bill thereof may rise up to $2500 million this year. It is difficult to understand how the BPC will foot this bill in the event of further upward revision of the domestic prices of petroleum products. But such a revision will have adverse repercussions on the domestic price situation. Inflationary pressures are already high, hitting hard the common people of the country.
Under such circumstances, it is important for the government and all others to devise appropriate ways to deal with the situation. We appreciate that such choices are difficult to make. But postponing hard decisions for too long a time may have more serious consequences for the overall economy.
Abu Ahmed
Siddeshawari
Dhaka
But petroleum prices in the international market have shown an ascending pattern, lately again. In the recent days, the international market rate for per barrel of crude oil shotup to US $ 88 and that for refined oil, to above $ 90. This has led to fresh pressures on the BPC's finances. One would like to note here that the country's annual import bill on account of both crude petroleum and POL (petroleum, oil and lubricants) rose to $2213 million in fiscal 2006-07 from $2004 million in fiscal 2005-06 and $1603 million in fiscal 2004-05. If the present uptrend in international oil prices continues, the import bill thereof may rise up to $2500 million this year. It is difficult to understand how the BPC will foot this bill in the event of further upward revision of the domestic prices of petroleum products. But such a revision will have adverse repercussions on the domestic price situation. Inflationary pressures are already high, hitting hard the common people of the country.
Under such circumstances, it is important for the government and all others to devise appropriate ways to deal with the situation. We appreciate that such choices are difficult to make. But postponing hard decisions for too long a time may have more serious consequences for the overall economy.
Abu Ahmed
Siddeshawari
Dhaka