Soaring petroleum prices in int'l market keep BPC at bay
Friday, 21 September 2007
M Azizur Rahman
Soaring petroleum prices in the international market have put the government in a difficult situation as the losses of the cash-strapped Bangladesh Petroleum Corporation (BPC) are mounting.
"The BPC has already incurred a fresh loss of over Tk 6.50 billion during the June-August period," a senior official of the Energy and Mineral Resources Division (EMRD) told the FE.
He said the loss might be higher in September compared to that of the previous month if the current rising trend of petroleum prices continues in the international market.
Despite last April's hike of fuel oil prices, the BPC is still incurring losses as it imports petroleum products at higher prices from the international market and sells those at lower prices in the local market.
Sources said petroleum prices are now hovering around US$ 80 a barrel in the international market, up by around $22 a barrel compared to that of the level in April last, when the government increased the petroleum prices.
To bail out the state-run corporation from its large debt, the government has planned to take over the BPC's accumulated default loans worth Tk 75.23 billion as its own liability by issuing treasury bonds of an equivalent amount.
But the rising petroleum products might push up the BPC's liabilities to a new high, a senior BPC official feared.
BPC's loss has been increasing every month since June last due to the volatile international petroleum market.
The BPC incurred losses of Tk 1.6 billion, Tk 2.17 billion and Tk 2.40 billion during the months of June, July and August respectively.
To overcome this financial hardship, the EMRD has planned to request the finance ministry again for Tk 15 billion in block allocation to continue fuel oil imports, if domestic prices of diesel and kerosene are not increased immediately.
The EMRD had approached the Ministry of Finance for this allocation several months ago but the ministry is yet to approve it, EMRD sources said.
To monitor oil prices in the international market and adjust prices in the local market, the EMRD constituted an eight-member permanent fuel oil price fixation committee about six months ago.
But the committee, headed by the BPC chairman, is yet to do so considering its adverse impact on the national economy, said sources.
Soaring petroleum prices in the international market have put the government in a difficult situation as the losses of the cash-strapped Bangladesh Petroleum Corporation (BPC) are mounting.
"The BPC has already incurred a fresh loss of over Tk 6.50 billion during the June-August period," a senior official of the Energy and Mineral Resources Division (EMRD) told the FE.
He said the loss might be higher in September compared to that of the previous month if the current rising trend of petroleum prices continues in the international market.
Despite last April's hike of fuel oil prices, the BPC is still incurring losses as it imports petroleum products at higher prices from the international market and sells those at lower prices in the local market.
Sources said petroleum prices are now hovering around US$ 80 a barrel in the international market, up by around $22 a barrel compared to that of the level in April last, when the government increased the petroleum prices.
To bail out the state-run corporation from its large debt, the government has planned to take over the BPC's accumulated default loans worth Tk 75.23 billion as its own liability by issuing treasury bonds of an equivalent amount.
But the rising petroleum products might push up the BPC's liabilities to a new high, a senior BPC official feared.
BPC's loss has been increasing every month since June last due to the volatile international petroleum market.
The BPC incurred losses of Tk 1.6 billion, Tk 2.17 billion and Tk 2.40 billion during the months of June, July and August respectively.
To overcome this financial hardship, the EMRD has planned to request the finance ministry again for Tk 15 billion in block allocation to continue fuel oil imports, if domestic prices of diesel and kerosene are not increased immediately.
The EMRD had approached the Ministry of Finance for this allocation several months ago but the ministry is yet to approve it, EMRD sources said.
To monitor oil prices in the international market and adjust prices in the local market, the EMRD constituted an eight-member permanent fuel oil price fixation committee about six months ago.
But the committee, headed by the BPC chairman, is yet to do so considering its adverse impact on the national economy, said sources.