Govt took profits of Petroleum Corporation, left it in lurch
Bangladesh Petroleum Corporation made huge profits for seven years through import of petroleum at low prices but the government took that money, leaving the BPC ill-equipped to cope with the current international market volatility.
Two ministers this week hinted at a hike in the prices of petrol and diesel, citing an upward trend in the international market. The fact that it was the government that put the BPC in this tight spot seemed lost on them.
The BPC made money since fiscal 2014-15 and is still in the black as of May, government reports show.
Critics and economists have questioned the timing of the move to increase the prices when consumers are already struggling to deal with high prices of daily essentials. Besides, diesel price was increased by Tk 15 just last November.
They said there were ways around increasing the prices.
Nasrul Hamid, state minister for power, energy and mineral resources, on Tuesday said, "The BPC is losing about Tk 100 crore every day due to the abnormal price hike of oil in the international market."
Talking to The Daily Star yesterday, BPC Chairman ABM Azad said, "We are in trouble as the international market has become volatile … ."
He said the corporation was incurring losses since February but has made no proposals to the government for raising prices.
When diesel price was increased last year, transport owners went on strike for three days, forcing the government to raise fares and putting the burden on the people.
Diesel was $100 a barrel, about 159 litres, then and crude $80.
Azad said diesel was over $170 a barrel in the global market this month and crude oil over $115.
Economist Zahid Hussain said the government should clearly outline its fuel pricing policy.
"When you [the government] made profits, you didn't decrease the prices, and when you are in losses, you want to hike the prices … it is not acceptable to the people."
He said a huge amount of money has been put aside for subsidies, of which a large portion is kept for the energy sector. The government should publish a clear picture of accounts in this regard.
"People are already under pressure from inflation. The inflation in the public transport sector is high enough. Now, if the government hikes the fuel prices again -- saying that otherwise, the development projects [of BPC] would stop -- it will not be acceptable."
The economist said fuel prices were decreasing significantly in the international market since 2014, but the government only made a minor adjustment in 2016. It made huge profits during that time.
Prof Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, said, "If the BPC had the profit to itself, it could wait until a certain time and observe the market situation. But the government took the money … ."
He said if the government felt the necessity to hike the prices, it should think about a balanced way and consider reducing VAT and taxes to ease the burden on consumers.
"... the accounts of the BPC should be transparent," he added.
He said if the fuel prices go up, prices of most products also go up, putting consumers in more trouble.
The CPD fellow, however, said if the government did not hike the prices, there would be a huge drain on subsidies, which will be met from taxes.
Ahsan H Mansur, executive director at the Policy Research Institute, said, "The hike is necessary. If the government does not hike the prices, it will have to meet the subsidies by printing extra money or by taking loans.
"If the government chooses that, the burden will be on everyone. If it hikes the prices, the burden will be on consumers only. Though it is an unpopular decision, the government has nothing to do except increase the prices."
Last week, the finance division published Bangladesh Economic Review 2022, where it mentioned the BPC made Tk 48,119 crore since fiscal 2014-15.
Since 2015, the government has taken Tk 13,100 crore from the BPC's profits. The company has its own development projects involving over Tk 30,000 crore.
As of May this year, BPC made Tk 1,263 crore.
"We have not finalised the accounts, the audit has not been done. Considering the situation, we don't see any possibility of having any profit this year," said the BPC chairman.
Azad claimed that the BPC lost about Tk 600 crore in February, Tk 1,300 crore in March, Tk 1,400 crore in April and May each.
In FY 2020-21, BPC imported 15.05 lakh tonnes of crude oil and 41.74 lakh tonnes of refined fuel.
Until February this year, BPC imported 8.72 lakh tonnes of crude and 28.55 lakh tonnes of refined fuel, according to the economic review.
Now, petrol is Tk 89 a litre, and diesel and kerosene Tk 80 a litre.