The government is set to cut furnace oil price in the local market in a couple of days, a senior energy ministry official told the FE on Saturday.
The decision on reducing the price came after the move by the private sector to purchase around 10 per cent of its total requirement from the Bangladesh Petroleum Corporation and around two weeks after imposition of import duties on the fuel.
Furnace oil is mostly used in power plants in the country and most of which is consumed by privately-owned power plants.
Private sector imports around 32 million tonnes annually to generate around 4,500 megawatt, or MW, of electricity. They get 9.0 per cent service charge as incentives to import the fuel at their own.
The BPC imports around 500,000 tonnes of furnace oil to generate electricity in government's power plants.
The corporation also provides around 400,000 tonnes of furnace oil from its lone crude oil refinery to the public sector power plants.
The energy ministry official said a gazette notification will be published soon as the officials of the Energy and Mineral Resources Division under the Ministry of Power, Energy and Mineral Resources have already discussed the issue, said the official.
The official, however, could not say the extent of the cut from the current price of Tk 42 per litre, but hinted that it would not be less than Tk 6-7 per litre meaning the new price of furnace oil might be Tk 35-36 per litre.
The current price of furnace oil was fixed on March 31, 2016 through an executive order when the price was slashed by 30 per cent to Tk 42 per litre from its previous rate of Tk 60 per litre.
Prices of other petroleum products, including diesel, kerosene, petrol and octane were also cut by up to 10.41 per cent after 24 days of that furnace oil price reduction on April 24, 2016.
But this time there might not be any price cut on the pump prices of diesel, petrol, octane kerosene, the official added.
The BPC is currently earning huge profits through trading of all types of petroleum products as it imports oil at lower prices from the international market and sells it at higher prices, as regulated by the government.
Import price of furnace oil by the private sector currently hovers around Tk 17 per litre, said president of Bangladesh Independent Power Producers Association, BIPPA, Imran Karim.
With the newly-imposed tax by the National Board of Revenue, or NBR, the price would be around Tk 29 per litre, he said.
But state-run Bangladesh Power Development Board, or BPDB, has been purchasing furnace oil from the BPC at a higher cost of Tk 42 per litre since April 1, 2016, resulting in higher electricity generation costs from their power plants.
Mr Karim said the reduction of furnace oil will not impact them as they import the fuel independently and get the price from the BPDB.
When contacted, energy adviser of the Consumers' Association of Bangladesh, or CAB, professor M Shamsul Alam demanded full downward adjustment of furnace oil price, not a partial one.
He also demanded a reduction in power tariff and the shutdown of all the rental and quick rental power plants 'right now' to reduce overall electricity generation costs.
"There is no legal obligation to annul the deals of oil-fired rental and quick rental power plants," said Mr Alam.
The CAB leader also alleged that the private sector has long been 'tampering' with oil import figures, for which he said it sells furnace oil to the BPDB more than their import quantity.
A vested quarter pours water with furnace oil to get extra bill from the board, he alleged.
Mr Alam, however, opposed any move to reduce the price of diesel, petrol or octane, saying the benefit does not go to the targeted people after the price reduction.
He demanded that the BPC invest the money of its profit from diesel, petrol or octane trading to necessary energy related development projects.
Officials said despite the lower-than-expected consumption, the BPC has been making profit of around Tk 6.0 liter in furnace oil trading now.
Prior to the country's lockdown, BPC's daily profit was around Tk 240 million ($2.85 million) on an average over March 9-25.
To ensure more profitability, normalcy in life is required and the COVID-19 pandemic and the resultant phobia must go, said a senior BPC official.
Currently, the pump price of octane and petrol is Tk 89 per litre and Tk 86 per litre, respectively, while the price of diesel and kerosene is Tk 65 per litre. The price of furnace oil is Tk 42 per litre.