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The loss of state-run Bangladesh Petroleum Corporation (BPC) is soaring keeping pace with the mounting oil prices in the international market.
It now incurs an estimated Tk 120 million in losses in oil trading per day, according to sources.
To reduce losses, the energy ministry increased the price of furnace oil by Tk 11 per litre or 26.19 per cent to Tk 53 per litre with effect from July 04.
Presently, the state-run corporation incurs a loss of around Tk 8.0 per litre in diesel trading.
Despite a recent hike in furnace oil price, it lost around Tk 10 per litre as on 20 September 2021.
Every day, the BPC sells around 15,000 tonnes of diesel in the domestic market after imports.
It also imports a nominal quantity of furnace oil and octane to meet the local demand.
Diesel, the key petroleum product that is mostly imported from abroad, now retails at Tk 65 per litre.
The BPC is at a break-even position in octane trading.
The country meets the demand for petrol from domestic sources. Local fractionation plants are generating necessary petrol after refining condensate being produced in local gas fields.
The global oil market is currently witnessing an uptrend following its steepest fall during the acute Covid-19 pandemic after March 2020.
The price of Brent crude, the benchmark in international oil price, is now hovering around $80.
It was as low as $19.33 per barrel on 21 April 2020.
During the virus-induced price fall, the BPC profited from diesel Tk 16 per litre and Tk 5.50 per litre from other petroleum products in the domestic market.
Officials said the BPC has racked up hefty profits riding on the sharp fall in oil prices globally over the past six years since 2015.
It, however, incurred huge losses until late 2014 when the oil price was higher.
The price of kerosene at the retail level is Tk 65 per litre while octane and petrol prices are at Tk 89 and Tk 86 per litre respectively.
The BPC meets most of its furnace oil demand from the Eastern Refinery Ltd that produces around 350,000 tonnes of oil annually after refining crude oil.
Most of the country's octane and the entire petrol and kerosene demands are met from the plant's output.
Furnace oil is mostly used at power plants, particularly at privately-run facilities.
The private sector imports around 32-million tonnes annually to generate around 5,500 megawatt of electricity. They get 9.0-per cent service charge as an incentive to import the fuel on their own.
The BPC imports nearly 400,000 tonnes of furnace oil to produce power at the state-run plants.
It annually imports around 5.0-million tonnes of diesel, 1.30-million tonnes of crude oil, 0.4-million tonnes of furnace oil and 50,000 tonnes of octane.
The corporation alone meets around 85 per cent of the local oil requirement and the private sector the rest.
It imports refined products based on Mean of Platts Arab Gulf Gasoil (MoPAG) assessments for five days, meaning the price is fixed at the average price of early two and post two days of assessment rates, including the delivery date.
The MoPAG is the benchmark oil-pricing formula made by Platts, a US-based energy informer and analyser.
The BPC imports crude oil on the basis of the OPEC (Organisation of Petroleum Exporting Countries) pricing formula in ports on the delivery date.
The BPC and the private sector fix the premium rate through negotiations with suppliers.
The premium rate is in addition to the international oil price payable by importers.
The government in an executive order on 24 April 2016 fixed diesel, kerosene, octane and petrol prices which have remained unchanged since then.