The Financial Express

No oil price hike now despite rise in international market

| Updated: August 04, 2021 14:28:04

Picture used for representation — Collected Picture used for representation — Collected

The government is not considering hiking the prices of petroleum products in domestic market now, despite incurring loss by selling those due to rising trend of the fuel prices in international market.

"We are not going to raise domestic oil prices now," Energy Secretary Md Anisur Rahman told the FE.

He said the state-run Bangladesh Petroleum Corporation (BPC) should bear the loss now, and relieve the consumers from bearing high oil prices.

The end-users counted higher prices for petroleum products over the past half a decade, when the price of oil was low in international market.

The oil price in international market is currently witnessing an uptrend. The price of Brent crude, the benchmark in international oil price, hovers at around US$ 74 per barrel as on August 3.

The BPC incurs loss, if the Brent crude price crosses $ 69 per barrel, said sources.

The state-run petroleum corporation is currently incurring loss worth around Tk 80 million a day in oil trading.

The pump or retail price of diesel and kerosene is now Tk 65 per litre each, octane and petrol prices are Tk 89 per litre and Tk 86 per litre respectively.

The government, through an executive order on April 24, 2016, had fixed the prices of diesel, kerosene, octane and petrol; and since then the prices remained unchanged.

Furnace oil price in retail market is Tk 53 per litre. It was raised from Tk 42 per litre on July 4.

The BPC is now incurring loss of around Tk 6.0 per litre in diesel trading. In furnace oil trading, it is counting loss of around Tk 1.0-1.5 per litre.

Diesel price in neighbouring India is, however, hovering from Rs 89 to Rs 97 per litre in different states. Petrol price in India is hovering within the range from Rs 98 to Rs 110 per litre in different states.

Diesel is the key petroleum product that the BPC imports from international market most.

The BPC sells around 12,000-15,000 tonnes of diesel everyday in domestic market after importing the fuel.

It is at break even position in octane and petrol trading. The price of kerosene at retail level is Tk 65 per litre, whereas octane and petrol prices are Tk 89 and Tk 86 per litre respectively.

Market insiders said the Brent crude price fell as low as $ 19.33 per barrel in April 21 due to the acute coronavirus pandemic and subsequent lockdown across the globe to check its spread.

During the price fall last year the corporation counted profit of around Tk 16 per litre in diesel and Tk 5.50 per litre in trading respective petroleum products in domestic market.

Officials said the BPC had racked up a hefty profit, riding on the sharp fall in oil prices in international market over the past six years since 2015.

It, however, incurred a huge loss until late 2014, when the oil prices were higher.

The state-owned corporation is currently importing around 5.0 million tonnes of diesel, 1.30 million tonnes of crude oil, 400,000 tonnes of furnace oil, and 50,000 tonnes of octane annually.

The BPC alone procures around 85 per cent of the country's oil requirement, with the rest by the private sector.

The corporation meets most of its furnace oil demand from the Eastern Refinery Ltd (ERL), which produces around 350,000 tonnes of furnace oil every year after refining crude oil.

Most of the country's octane demand and entire petrol and kerosene demands are made from the ERL's output.

Furnace oil is mostly used in power plants in the country, most of which is consumed by privately-owned power plants.

Private sector imports around 32 million tonnes annually. They get 9.0 per cent service charge as incentive to import the fuel at their own.

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