BPC returns to profit after five years

Bangladesh Petroleum Corporation bucked its five-year losing streak this fiscal year, making a tidy profit of Tk 3,455 crore on the back of sliding global oil prices.

The windfall was provisional and based on the data available until April, said an official of the country's lone oil importer and seller. 

The turnaround in fortunes for the state-run agency, which last made a profit in fiscal 2008-09 of Tk 323 crore, comes despite the increase in petroleum imports. 

Fiscal 2014-15's figure means BPC has managed profits only twice in the last 15 years. 

BPC will use the profit to repay its debts, the company's Chairman AM Badrudduja said. At present, the oil importer owes Tk 3,000 crore to state banks, Petrobangla and the National Board of Revenue. 

BPC was in the red for every year between 2009-10 and 2013-14 as the prices were high in the international market but were not adjusted in the local market. 

The losses forced the government to set aside a huge amount of taxpayers' money as subsidies in its budget in those five years. 

The government doled out Tk 30,986 crore since fiscal 2008-09 for keeping the prices of petroleum products low in the local market.

Although BPC has made a profit this year, the government has still allocated Tk 600 crore in the revised budget for petroleum imports. In the original budget for fiscal 2014-15, Tk 2,400 crore was allocated. 

Officials said BPC required subsidies for imported petroleum products at the beginning of the fiscal year as the prices were still high in the international market. As the year wore on, the need for state support subsided in keeping with the declining prices at the international market.

The government will still set aside Tk 800 crore as fuel subsidies for the upcoming fiscal year as a hedge against any potential increase in oil prices in the global market. 

“We may not need it at the end of the day, but we have to be mindful that the global oil market is very unpredictable,” Badrudduja said.

Crude prices are currently hovering around $65 per barrel, after dropping to $44 a barrel in January. 

Although the oil imports were higher in fiscal 2014-15 from a year ago, the government spent less thanks to the fall of global prices. 

Until February this year, the country imported 7.05 lakh tonnes of crude oil worth Tk 3,816 crore. 

About 5.75 lakh tonnes of unrefined petroleum products were imported during the same period a year ago at a price of Tk 5,435 crore, according to figures from BPC and the Mineral Resources Division. 

Refined oil imports stood at 17 lakh tonnes in the first eight months of the fiscal year, costing Tk 10,947 crore.

Last fiscal year, 12 lakh tonnes of refined oil were imported for Tk 9,502 crore.   

BPC spent Tk 2,085 crore until February this fiscal year to import 4.7 lakh tonnes of furnace oil. 

It was Tk 6.2 lakh tonnes in the same period a year ago, costing the country Tk 3,224 crore.    

BPC is making a whopping profit of Tk 13 to Tk 36 per litre on petroleum products. 

The profit margin is Tk 13.77 per litre for kerosene, Tk 14.68 for diesel, Tk 19.57 for furnace oil and Tk 18.75 for jet fuel.

As the oil prices in the global market went into freefall from last June, both the World Bank and the International Monetary Fund pursued the government bank to deregulate domestic oil prices and introduce a system that makes automatic adjustment of oil prices in line with global market rates.

However, a finance ministry official said the government has no plans to lower the prices, as the country incurred huge losses in the past. 

The government wants to recoup the losses first.