Home ›› 06 Oct 2022 ›› Front
When the country is facing high inflation, the export-oriented industry is losing work orders, and the fuel price is dwindling in the global market, Bangladesh Petroleum Corporation (BPC) is making a profit of at least Tk9 by selling a litre of diesel.
If the BPC does not adjust the price, the state-owned company will make a profit of Tk450 crore per month, taking into consideration the base price of October 03 international market prices.
Besides, BPC is also making a huge profit by selling kerosene, petrol and octane mainly produced in domestic gas fields as condensate.
However the state-owned BPC officials have claimed that they are yet to reach break-even point and the adjustment procedure depends on the government’s decision.
“The price is downward in international market and we are almost near the break-even point. Price adjustment depends on the government decision,” BPC Director (Operations and Planning) Khalid Ahmed told The Business Post.
Amid the situation, experts and business people sought to adjust fuel prices considering the country’s economy. It was also a commitment when the government increased it.
M Tamim, professor of Bangladesh University of Engineering and Technology (BUET), told The Business Post that BPC was increasing diesel price considering its price in $139 but it now stands at $112 to $116.
BPC is counting huge profit from diesel, octane, petrol and kerosene, he said.
Even Bangladesh Garment Manufacturers and Exporters Association (BGMEA) placed a letter to the Prime Minister on October 02 requesting her to bring the price of diesel to the previous level (Tk80) considering country’s export-oriented apparel sector’s negative export performance and sufferings of domestic industry.
“The government committed that it would adjust diesel price when it came down in the international market. Now we are facing gas and electricity crises amid low export orders and this is why we have to use a huge amount of diesel to run generators,” BGMEA President Faruque Hassan told The Business Post.
Research and Policy Integration for Development (RAPID) Chairman Professor Mohammad Abdur Razzaque said, “Most of the countries are adjusting fuel price regularly but Bangladesh does not following the practice.”
Many countries are purchasing Russian fuel which helps the price to come down by around 15 percent in international market. The government should adjust the price to cut inflation and increase export earnings, he observed.
On average, Bangladesh’s monthly diesel consumption is above 5 lakh tonnes and the country is importing refined diesel of its three-fourth demand. BPC bought per barrel (160 litre) refined diesel at $112 on October 03.
Per litre fuel price is Tk79.41 ($1= Tk105) including $9 premium. By adding Tk12 tax and Tk8 locally distribution costs including transportation, dealer’s commission and other expenses per litre diesel cost was Tk99.5.
On September 27, per barrel refined diesel’s price was $116 and taking into consideration the base price of the day, per litre diesel’s cost was Tk102 including premium, tax and distributing charge.
But currently per litre diesel is selling at Tk109.
However, when the government increased diesel price by 42.5 percent to Tk114 from Tk80 on August 05 per barrel refined diesel price was $139.
Meanwhile, the Reuters report claimed that crude oil price had been dwindling since the end of August and the price was nine-month lowest on 24 September at $82.
Industry insiders and economists claimed that global economy is passing through a critical moment due to the Russia-Ukraine war and it’s already impacted Bangladesh’s economy.
Bangladesh’s export and remittance earnings came down while general inflation increased due to the crisis.
According to the Export Promotion Bureau (EPB), the country’s export earnings declined by 6.25 percent to $3.9 billion in September year-on-year basis.
Expatriates sent $1.53 billion this September, a seven-month low and a 10.84 percent decline from $1.72 billion recorded during the same month last year, the Bangladesh Bank data shows.
The crises are severally impacted the country’s employment and people’s livelihood.
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Executive President Mohammad Hatem said, “How come BPC is making profit by selling diesel while all economic indicators are negative? Our main challenge is to survive and the government should adjust diesel price regularly.”
Amid this situation, fuel price adjustment would be best option to tackle the crisis, he said.
Industry insiders said the government had failed to provide uninterrupted gas and energy supply even after hiking fuel price. Although the government reduced per litre diesel price by Tk5, it is not enough compared to the international market.
Due to the interrupted gas and electricity supply, all domestic and export-oriented industries are using diesel-fired generators that have increased production cost worsening money inflation.
On the other hand, many factories are reducing workers due to low revenue. Amid the situation, reducing diesel price is likely to help restore the country’s economy, they think.
BGMEA President Faruque Hassan said: “Our most of the export destination countries are facing high inflation resulting in low export orders. Our production cost will come down if the government adjusts the fuel prices helping us to get more orders.”
Ahsan H Mansur, Executive Director of the Policy Research Institute of Bangladesh, told The Business Post that the government should adjust fuel price weekly. If they think it is difficult to adjust every week, they could take maximum 15 days.
