BPC nets staggering profit as fuel price not adjusted

In absence of proper retail price adjustment, Bangladesh Petroleum Corporation (BPC) is reaping a very high profit of Tk 6 per litre of kerosene and diesel and Tk 30 per litre of octane and petrol.
The BPC is making a profit of Tk 4.47 crore a day with the Tk 6 profit in each litre of kerosene and diesel, says an official asking not to be named.
The government last year significantly hiked the petroleum prices as the international price skyrocketed up to $147 a barrel in July. But the price nose-dived the following month and is now hovering around $40.
However, the price fall has yet to leave an impact on the local market. The government has so far made minor cuts in petroleum prices and is likely to further reduce the prices today.
The BPC is also planning to propose to the government for price cut on liquid petroleum gas (LPG) by around Tk 150 per cylinder within a fortnight or so, say the sources.
They add BPC, which was incurring huge loss till last year, is presently making huge profit by selling its existing stock of imported oil procured in late November at $55 (crude) and $70 (refined) per barrel.
With some 159 litres contained in a barrel, each litre of diesel and kerosene now costs around Tk 40, including 15 percent VAT and other costs, and each litre of petrol and octane around Tk 46.
The three marketing companies of BPC are marketing at least 9,000 tonnes of fuel a day. The daily demand of diesel and kerosene is around 70 percent of this quantity or 6,300 tonnes.
One tonne of petroleum produces 1,286 litres of kerosene and 1,186 litres of diesel after processing. On average, there are 1,236 litres in one tonne of kerosene or diesel, which means the daily sale of kerosene and diesel amounts to around 77.87 lakh litres.
"BPC had the scope to reduce the price by Tk 5-6 per litre of diesel and kerosene without giving any subsidy. Reducing the price further may create a scope for feared smuggling of diesel and kerosene out of the country," the official adds.
BPC insiders say currently the corporation has 2.3 lakh tonnes of diesel, 30 thousand tonnes of kerosene, 9,500 tonnes of octane and 9,600 tonnes of petrol in its stock.
Besides, another 1.2 lakh tonnes of diesel and 8,000 tonnes of petrol and octane is scheduled to arrive here within this month, informs a high official of BPC marketing department.
Interestingly, BPC officials in the port city and capital were tightlipped about the price of import fuel oil arriving this month.
The official sources say the price of the fuel oil BPC procured in December ranges between $40 to $55 per barrel.
Meanwhile, BPC witnessed almost "zero" sale of all sorts of fuel oil here yesterday ahead of the expected announcement of price cut, said sources in marketing companies.
The "zero" sale of cylindered LPG of BPC continued for over two weeks since the state-owned enterprise is selling a single cylinder of 14.5kg at Tk 982 against private importers' offer of less than Tk 850.
Earlier, the three marketing companies together could hardly cope with the monthly demand of over 60 thousand cylinders, the sources added.
Asked, BPC General Manager (Marketing) Abu Hanif admitted the fact and attributed the matter to the absence of LPG production at Eastern Refinery Limited (ERL), the country's lone refinery located in Patenga.
However, with LPG production already resumed at ERL since Friday, BPC expects to have sufficient supply of LPG and plans to propose price reduction by Tk 130-150 per cylinder within a fortnight or so, the sources said.
The BPC may not avail of the record low international market price of $40 per barrel since it procures a better quality fuel oil from Saudi Arabia and the UAE at a higher price, they claimed.