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The Financial Express

Coronavirus: Falling oil prices prove to be a boon to BPC

M AZIZUR RAHMAN | Published: February 23, 2020 10:49:41 | Updated: February 25, 2020 10:40:32


Picture used for representational purpose - Collected Picture used for representational purpose - Collected

The spread of the coronavirus in and outside of China and subsequent fall in oil prices in international market turned to be a 'boon' to Bangladesh Petroleum Corporation (BPC).

The BPC, which was incurring loss before the spread of novel coronavirus, COVID-19, is now reaping profit riding on the slump in global oil prices, said a senior BPC official.

The price of Brent crude, the benchmark in international oil prices, was quoted around $ 57 a barrel as on February 21.

It was over $70 per barrel on January 07, 2020 in regular futures market.

The spot market for Middle East crude cargoes loading in April was virtually non-existent this week, as demand continues to be depressed due to the coronavirus outbreak. 'Buyers are waiting for cargoes to become even cheaper than they are now,' said sources.

If the crisis over coronavirus outbreak continues, the global oil prices might slip further making the BPC fiscally healthier.

The BPC counted profit worth around Tk 3.0 per litre in diesel trading last week due to lower global oil prices.

Diesel is the main petroleum product that the BPC imports to meet domestic demand in power plants, transports, irrigation and industries.

The state-run petroleum corporation imported around 5.0 million tonnes of diesel and 200,000 tonnes of furnace oil last year, which is expected to increase in the current year, said the BPC official.

The BPC, however, is now at almost breakeven in furnace oil trading, considering the oil price in international market last week, he said.

But the loss now incurring in furnace oil marketing is not that significant as the BPC imports very nominal quantity of furnace oil every year to meet local demand.

The current pump price, or retail level price of furnace oil is Tk 42 per litre, diesel and kerosene Tk 65 per litre each and octane and petrol is Tk 89 per litre and Tk 86 per litre respectively.

The government, through an executive order on April 24, 2016, had fixed the prices and since then the prices remained unchanged.

Officials said, the BPC had bagged hefty profits riding on sharp fall of oil prices in international market during 2014-2017.

After 2017, BPC's fiscal status fluctuated with the rise and fall in oil prices in international market.

The BPC had booked a profit of Tk 42.12 billion during fiscal year 2014-15 (FY 2015), Tk 63.42 billion during FY 2016 and Tk 43.99 billion during FY 2017, according to BPC statistics.

It also paid Tk 22 billion into government exchequer during FY 2016 and FY 2017 as dividend.

The corporation also paid dues worth Tk 30.90 billion to state-owned Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank, Tk 17.58 billion to Petrobangla, and Tk 6.03 billion as pending value-added tax (VAT) to the National Board of Revenue (NBR) over the past several years from its profit.

Before late 2014, it had incurred a loss of Tk 23.32 billion in FY2013-14 and Tk 48.32 billion in FY2012-13. In FY2011-12, the loss was Tk 113.71 billion, which was Tk 88.40 billion in FY2010-11. The BPC had counted losses every year since FY2001-02 till FY2013-14.

Before the spread of coronavirus, oil prices in international market was witnessing an uptrend due to growing Iran-US tensions over the assassination of Iran's military commander Gen Qasem Soleimani.

Azizjst@yahoo.com

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