Fuel oil consumption falls by 0.3m tonnes this fiscal
Shakhawat Hossain | Thursday, 5 June 2008
The country's fuel oil consumption fell by at least 0.3 million tonnes in the outgoing fiscal compared with that of last fiscal year, said an energy division official.
"Consumption of the fuel oils will not cross 3.5 million tonnes in the outgoing fiscal," said Bangladesh Petroleum Corporation (BPC) chairman Anwarul Karim Chowdhury.
Fall in consumption will be at least 0.3 million tonnes as the country consumed about 3.8 million tonnes of fuel oils in 2006-07 fiscal, he said.
The annual fuel oil consumption has fallen for the first time after the country witnessed a 10 per cent annual growth over the past one decade.
The fall in fuel oil consumption has been attributed to the increased use of compressed natural gas (CNG), curbing of cross border smuggling and efficient use following 100 per cent rise in its price in the international market.
Currently, 132,042 vehicles are using the natural gas instead of costly oil helping the country save around Tk 3.91 billion each month, said a BPC estimate.
The BPC chairman termed the fall a significant development saying this is the only good news at a time when there is a forecast on further price hike of oil in the international market.
"Less consumption will reduce pressure on the BPC for the import of fuel and help the country save valuable foreign exchange," he said.
Despite the fall in oil consumption, the country needed around US$ 3.1 billion to foot the import bill in the outgoing fiscal. The amount was, however, $2.10 billion in the last fiscal.
American investment bank Goldman Sachs predicted in 2005 that per barrel crude price would reach $100. Its recent forecast was that per barrel crude oil would be $200 after 2009.
The country has been passing through the most challenging time due to soaring price of fuel oils as the government has not made any adjustment in oil prices in the local market over the last 14 months.
In April 2007, the country made last adjustment in oil price in the local market when the price of per barrel crude was selling at around US$64 in the world market.
Due to such policy, the government was forced to provide subsidy worth more than Tk 70.00 billion on fuel oil in the outgoing fiscal, said a finance ministry official.
"The big expense on oil subsidy has widened the budget deficit at 4.8 per cent from the projected 4.2 per cent and forced the government to borrow Tk 140.00 billion from internal sources in the first nine months of the outgoing fiscal," he said.
Besides, the BPC has to take loan from the overseas banks on tough condition, which will raise future debt service liabilities.
The finance ministry Wednesday released Tk 9.0 billion as cash assistance to the BPC that was the last installment of the total subsidy for the outgoing fiscal.
The finance ministry official said the government might consider hiking oil prices in the local market in a day or two as the energy division has already informed that the BPC's trade deficit will hit Tk 170 billion in the new fiscal if the government fails to make any upward price adjustment.
"The oil price adjustment issue is closely linked with the national budget as it will influence the budget size and other allocations," he said.
"Consumption of the fuel oils will not cross 3.5 million tonnes in the outgoing fiscal," said Bangladesh Petroleum Corporation (BPC) chairman Anwarul Karim Chowdhury.
Fall in consumption will be at least 0.3 million tonnes as the country consumed about 3.8 million tonnes of fuel oils in 2006-07 fiscal, he said.
The annual fuel oil consumption has fallen for the first time after the country witnessed a 10 per cent annual growth over the past one decade.
The fall in fuel oil consumption has been attributed to the increased use of compressed natural gas (CNG), curbing of cross border smuggling and efficient use following 100 per cent rise in its price in the international market.
Currently, 132,042 vehicles are using the natural gas instead of costly oil helping the country save around Tk 3.91 billion each month, said a BPC estimate.
The BPC chairman termed the fall a significant development saying this is the only good news at a time when there is a forecast on further price hike of oil in the international market.
"Less consumption will reduce pressure on the BPC for the import of fuel and help the country save valuable foreign exchange," he said.
Despite the fall in oil consumption, the country needed around US$ 3.1 billion to foot the import bill in the outgoing fiscal. The amount was, however, $2.10 billion in the last fiscal.
American investment bank Goldman Sachs predicted in 2005 that per barrel crude price would reach $100. Its recent forecast was that per barrel crude oil would be $200 after 2009.
The country has been passing through the most challenging time due to soaring price of fuel oils as the government has not made any adjustment in oil prices in the local market over the last 14 months.
In April 2007, the country made last adjustment in oil price in the local market when the price of per barrel crude was selling at around US$64 in the world market.
Due to such policy, the government was forced to provide subsidy worth more than Tk 70.00 billion on fuel oil in the outgoing fiscal, said a finance ministry official.
"The big expense on oil subsidy has widened the budget deficit at 4.8 per cent from the projected 4.2 per cent and forced the government to borrow Tk 140.00 billion from internal sources in the first nine months of the outgoing fiscal," he said.
Besides, the BPC has to take loan from the overseas banks on tough condition, which will raise future debt service liabilities.
The finance ministry Wednesday released Tk 9.0 billion as cash assistance to the BPC that was the last installment of the total subsidy for the outgoing fiscal.
The finance ministry official said the government might consider hiking oil prices in the local market in a day or two as the energy division has already informed that the BPC's trade deficit will hit Tk 170 billion in the new fiscal if the government fails to make any upward price adjustment.
"The oil price adjustment issue is closely linked with the national budget as it will influence the budget size and other allocations," he said.