Despite repeatedly citing losses as the reason for fuel price hikes, Bangladesh Petroleum Corporation (BPC) is projected to make a record profit of over Tk 3,841.51 crore in the fiscal year 2023-2024.
In the previous fiscal year 2022-2023, BPC reported even higher profits, exceeding Tk 5,858.95 crore.
BPC has also paid a record amount in VAT, taxes, and duties to the National Board of Revenue (NBR). These figures were revealed from a Ministry of Finance source.
However, previous fiscal years indicate that BPC’s expenses will exceed a record Tk 5,563.98 crore due to increased spending in the fiscal year 2024-2025.
BPC is primarily responsible for importing, storing, and marketing fuel oil in Bangladesh, with an extensive network across the country. According to BPC, the annual demand for fuel oil in Bangladesh exceeds 6.5 million tonnes, which is mainly met through imports.
Since March 2024, under the conditions of the IMF’s $4.7 billion credit facility, BPC has been setting domestic fuel prices monthly in line with the international market. Despite claims of price adjustments, the prices have been increasing marginally each month, attributed to higher global oil prices.
Previously, the government set fuel prices through executive orders, disregarding the Bangladesh Energy Regulatory Commission Act-2003. This led to a one-time price increase of 42 per cent for various fuels in August 2022, purportedly to offset losses, causing significant inflation in the country, according to economists.
An analysis of the Ministry of Finance document shows that the projected allocation for BPC is Tk 94,116.09 crore, up from Tk 84,253.91 crore in the revised budget for the current fiscal year, and Tk 79,187.51 crore for the 2022-23 fiscal year.
The annual increase in BPC’s allocation is attributed to rising operational costs driven by the devaluation of the Taka against the dollar.
The finance ministry document indicates that BPC's expenditure for the current fiscal year is set at Tk 79,619.69 crore against an allocation of Tk 84,253.91 crore, resulting in a post-revised budget profit of Tk 3,841.41 crore. BPC is projected to contribute Tk 300 crore in dividends to the state treasury this fiscal year, compared to Tk 700 crore in the previous fiscal year.
The revised budget for 2023-24 and the finance ministry document project BPC’s contributions in VAT, taxes, various fees, and dividends to the state treasury at Tk 11,398.46 crore and Tk 13,607.31 crore, respectively. Despite forecasting losses for the upcoming fiscal year, the government plans to collect record VAT and taxes from fuel oil, a move often criticised by energy experts who argue for minimal VAT and tax on essential goods.
Nonetheless, the government continues to collect record VAT and taxes from fuel imports and marketing every year. In the fiscal year 2022-23, BPC paid Tk 15,432.64 crore in VAT and taxes.
The finance ministry document also highlights the significant annual growth in BPC’s assets. As of June 30, 2023, BPC’s total assets were valued at approximately Tk 81,598.70 crore, with a debt-to-equity ratio of 64:36.
By the end of the current fiscal year, BPC’s assets increased to around Tk 89,560.98 crore. The finance ministry document projects BPC’s assets to reach approximately Tk 98,336.30 crore, with a slightly increased debt-to-equity ratio of 63:37 in FY25.
