Oil import bill to soar this year

The government's oil import bill is set to jump 36 percent this fiscal year thanks to the appreciation of the dollar and an increase in global oil prices -- a development that can lead to a hike in oil prices in the local market, officials said.

In fiscal 2018-19, 75 lakh tonnes of oil is set to be imported for $4.85 billion, according to Bangladesh Petroleum Corporation (BPC). The exchange rate hit Tk 83.75 in July, meaning Tk 40,600 crore will have to be spent.

Last fiscal year, BPC spent $3.67 billion for importing 67 lakh tonnes of petroleum products. The average letter of credit rate against the import was Tk 81.30 per dollar and the total cost stood at Tk 29,873 crore.

At the same time, the price of crude oil increased $38.34 per barrel to $81.51 this year and that of diesel by $38.25 per barrel to $88.56, according to BPC. 

BPC is incurring losses of Tk 20.97 crore per day due to the hike of oil price in the global market as well as dollar price in the local market, according to one of its reports.

Industry insiders fear the rising import cost may compel the government to hike the oil price. The government had slashed the fuel price back in April 2016 and left it at that rate since.

To combat the two-pronged assault on the oil import bill, BPC has recently requested subsidy of Tk 8,500 crore for this fiscal year, according to Md Altaf Hussain Chaudhury, its director.

If the oil price is not increased this year, the government will have to give the subsidy, he added.

Though the volume of petroleum products that was supposed to be imported this fiscal year is not that much higher than last year, the cost will increase substantially due to the appreciation of the dollar, said a senior executive of BPC.

At present, BPC is opening LCs at Tk 83.75 per dollar but banks are not interested as the rate is much higher, he said.

Recently, three state-owned banks -- Sonali, Janata and Rupali -- requested BPC to bump up its LC rate as they have to purchase dollar at a much higher price from the market.

“But BPC did not agree to raise the rate as the Bangladesh Bank fixed it at 83.75,” the official said.

Though the government banks are opening LCs at Tk 83.75 per dollar for oil import, private banks have refrained from doing so.