Falling fuel prices a boon to BPC, not consumers

The state-run Bangladesh Petroleum Corporation (BPC) earned a profit of Tk.1.50 billion (150 crore) during the first half the current fiscal year.
The earning of profit by the BPC is attributed to the drastic fall in fuel oil prices in the international market.
The corporation, engaged in oil marketing operations, could never earn profit during last 14 years since the FY 2002.  
The BPC, however, has been providing revenues worth billions of Taka to the government exchequer in the form of value added tax (VAT) and other taxes against the import of petroleum, the BPC statistics reveals.
The corporation incurred the lowest amount of loss, Tk 76.10 million in the FY 2003, when it provided Tk 27.66 billion to the government exchequer as VAT and other taxes.
It had incurred the highest amount of loss in the FY 2012 --- Tk 105.51 billion. However, its contributions to the national exchequer amounted to Tk 46.91 billion, the BPC statistics revealed.
A senior BPC official said it has been earning profit in every consecutive month since October 2014 with the drastic fall in oil prices in international market.
The BPC earned a profit of Tk 481 million in October, Tk 3.22 billion in November and Tk 4.51 billion in December 2014, he added. The profit for the first half of the current fiscal has estimated after adjusting the losses incurred during the first two months, July and August.
The BPC has been earning profit from all the products it is now selling domestically.
If the corporation continues to earn profit at the current rate, its total profit earning in the FY 2015 could be a healthy one, the BPC officials have expressed the hope.
The price of Brent crude, the benchmark in oil price, on international market slumped to a five-year low to below $50 a barrel in January, 2015 due to over- supply of oil in market, industry insiders said.
Although it has recovered a bit from the bottom and now hovering at around $60 per barrel, different international investment banks have predicted that the price would hover around the current price level at least for the current calendar year, they added.
The lower oil price in international market might extend further, they predicted.
A senior official of the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources said it categorically that  the government had no immediate plan to cut domestic prices of petroleum products despite the substantial fall of oil price in international market.
The international prices of oil have declined by nearly half since the latest upward adjustment in the domestic prices of the same was made effective on January 03, 2013.
The Brent crude price was around $120 barrel, when the hike was made effective in the country.
Official sources said the government would monitor the oil-price indices for a certain period before taking any decision on price adjustments.
"We shall keep an eye on the price movements of petroleum products on the international market and see how long the declining price-trend continues to prevail," State Minister for the Ministry of Power, Energy and Mineral Resources (MPEMR) Nasrul Hamid told the FE earlier.
Mr Hamid, however, didn't say how long the wait may last.
"We are interested to adjust the subsidy first," he had said, indicating that the spin-off from the global market fall will be used to make up, to some extent, the loss incurred on account of subsidy that the government paid on fuels.
If the downward rally of oil prices continues for long, the government might consider a downward adjustment in domestic petroleum prices, Mr Hamid had said.
The government raised the domestic prices of petroleum products in the latest by up to 11.47 per cent on January 3, 2013 by an executive order to offset the mounting losses the BPC was suffering then.
The government then increased the prices of diesel and kerosene by Tk 7 per litre each to Tk 68 per litre and petrol and octane by Tk 5 per litre each to Tk 96 per litre and Tk 99 per litre respectively.
Despite the 2013 hike, BPC had incurred an estimated loss of Tk 11.77 per litre on the sale of diesel and Tk 12.15 per litre on kerosene sale then, said sources.
The government finally provided BPC Tk 24 billion in subsidy to offset the loss during the FY 14.
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