The Bangladesh Petroleum Corporation (BPC) witnessed a year-on-year 10.3 per cent decline in sales in the July-December period of FY24, indicating a shrinking economic demand, triggered by the domino effect of skyrocketing inflationary pressure.
According to the BPC, in H1 of FY24, the quantity of petroleum product sales was 32,95,900 tonnes, compared to 36,75,494 tonnes posted in FY23. These figures indicate a 3,79,594 tonnes or 10.33 per cent year-on-year decrease in FY24.
Speaking to The Business Post, BPC Director (Marketing) and Joint Secretary Anupam Barua said, “There are no ongoing mega projects in the country, so the demand for petroleum products is on the decline, which has impacted our sales.
The BPC imports and supplies petroleum products following requirements of different institutions, usually importing bitumen, diesel, petrol and ten other petroleum products. Diesel has the most demand in the country, occupying at least half of its sales volume.
In the first six months of FY24, diesel imports stood at 20,71,063 tonnes. In FY23, the figure was 24,99,570 tonnes. Diesel sales have declined by 4,28,507 tonnes or 17.15 per cent year-on-year.
Barua pointed out, “Although diesel sales have declined, sales of other types of fuel such as furnace oil have gone up. There is no shortage of fuel oil in the country. Diesel will be supplied according to the demand in the upcoming paddy harvesting season.”
According to the BPC, it sold 4,82,200 tonnes of furnace oil in the first six months of FY24, compared to 4,23,901 tonnes recorded in the previous FY.
Latest data from the central bank shows that the import payment of petroleum goods declined by 5.6 per cent to $2.82 billion in the July – November period of FY24.
Among these products, diesel is the most sold, as it is directly related to production in Bangladesh’s economy. In the first six months of current FY, the import of such fuel has decreased the most, by 17.5 per cent.
Zahid Hussain, former lead economist of World Bank Dhaka office, said, “Oil consumption has a big relationship with the overall economy. Especially diesel, as it is directly used by agriculture, irrigation, transportation, and many other industrial sectors.
“The biggest consumer of diesel is the transportation sector. Such consumption is indirectly related with production. If production increases, transportation demand will increase as well, thus diesel consumption will increase too. Since consumption has decreased, it can be said that the BPC's oil sales have decreased due to reduced demand in the economy.”
The eminent economist continued, “High inflation has reduced purchasing power, so other than fulfilling basic needs, consumption of other goods and services are on the decline.
“As a result, production in the industry may have declined due to reduced demand, the impact of which is reflected in the industrial production index prepared by the Bangladesh Bureau of Statistics (BBS).”
The index showed that in July, the first month of FY24, the industrial production index was 199.89, which declined to 188.16 in October. Meanwhile, the manufacturing sector industrial production index was 203.39 in July last year, which was down to 191.02 in October in the same year.
Economists and industry insiders said as the industrial production declined due to skyrocketing inflationary pressure, demand has shrunk. In the first half of FY24, average inflation was near to 10 per cent, which was highest in South Asian countries following with Pakistan.
Commenting on the matter, Dhaka Chamber of Commerce & Industry (DCCI) ex-president Abul Kasem Khan said, “The biggest challenge for the country now is to rein in inflation.
“The BBS index shows slowed industrial production and this is the reality. We can see that the revenue in many companies are falling, or slowing down. If the capital machinery imports, cargo handling, and ship arrivals decline, we can say that our economy is shrinking.”
According to latest data from the Bangladesh Bank, capital machinery import payments declined by 21.1 per cent to $1.7 billion in the July-November period of FY24, compared to $2.15 billion in the same period last FY.
Meanwhile, the Chittagong Port Authority data shows that the number of export-import cargo handling was 99,404,99 million tonnes in July, which declined to 96,76,700 million tonnes in December last year.
Besides, the container handling was 2,77,161 TEUs in July, which declined to 2,68,457 TEUs in December.
The number of vessels has also declined. In July last year, the total number of vessel was 369, which declined to 313 in December.
