BPC loss soaring alongside surge in global oil prices

| Updated: October 03, 2021 1:19:43 PM

The loss of the state-owned Bangladesh Petroleum Corporation (BPC) is increasing rapidly with rising oil prices in the world market.

It is now suffering an estimated Tk 120 million in oil trading losses per day, according to sources.

In order to reduce the losses, the Ministry of Energy has increased the price of heating oil by Tk 11 per liter or 26.19 percent to Tk 53 per liter with effect from July 4th.

The state-owned company is currently suffering a loss of around Tk 8.0 per liter in the diesel trade.

Despite a recent increase in the price of heating oil, it lost around Tk 10 per liter on September 20, 2021.

After imports, BPC sells around 15,000 tons of diesel on the domestic market every day.

It also imports a nominal amount of furnace oil and octane to meet local needs.

Diesel, the most important petroleum product, which is mainly imported from abroad, now costs 65 Tk per liter.

The BPC is in a break-even position in octane trading.

The country meets the demand for gasoline from domestic sources. Local fractionation plants produce the necessary gasoline after refining condensate produced in local gas fields.

The global oil market is currently experiencing an upward trend after its sharpest decline during the acute Covid-19 pandemic after March 2020.

The price of Brent crude oil, the benchmark for the international oil price, is currently around $ 80.

On April 21, 2020, it was just $ 19.33 a barrel.

During the price drop caused by the virus, BPC benefited from Diesel Tk 16 per liter and Tk 5.50 per liter from other mineral oil products on the domestic market.

Officials said the BPC has made big profits around the world since 2015 due to the sharp drop in oil prices over the past six years.

However, it suffered huge losses until the end of 2014 when the price of oil was higher.

The retail price of kerosene is 65 Tk per liter, while octane and gasoline prices are 89 Tk and 86 Tk per liter, respectively.

BPC covers most of its blast furnace oil needs from Eastern Refinery Ltd, which after refining crude oil produces around 350,000 tons of oil annually.

Most of the country’s octane rating and all of its gasoline and kerosene needs are met from the facility’s production.

Furnace oil is mainly used in power plants, especially in privately operated plants.

The private sector imports around 32 million tons annually to generate around 5,500 megawatts of electricity. You will receive a 9.0 percent service fee as an incentive to import the fuel yourself.

The BPC imports almost 400,000 tons of blast furnace oil to produce electricity in the state facilities.

It imports around 5.0 million tons of diesel, 1.30 million tons of crude oil, 0.4 million tons of heating oil and 50,000 tons of octane annually.

The group alone covers around 85 percent of local oil requirements, the rest from the private sector.

It imports refined products based on Mean of Platts Arab Gulf Gasoil (MoPAG) ratings for five days.

MoPAG is the oil price benchmark formula created by Platts, a US energy informatics specialist and analyzer.

The BPC imports crude oil based on the OPEC (Organization of Petroleum Exporting Countries) price formula in ports on the day of delivery.

The BPC and the private sector determine the premium rate through negotiations with the suppliers.

The premium rate is to be paid by the importers in addition to the international oil price.

In an ordinance of April 24, 2016, the government set diesel, kerosene, octane and gasoline prices that have remained unchanged since then.

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