Bangladesh Petroleum Corporation (BPC) incurred losses of Tk20,059.73 crore between March and July after purchasing fuel at substantially higher international prices while selling it at lower prices in the domestic market, according to figures cited by the state-owned agency.
The financial strain has been linked to the sharp rise in global fuel prices following the conflict in the Middle East. Officials familiar with the situation have warned that if elevated oil prices persist, the government could face another Tk11,000-12,000 crore in losses between August and December.
That would take the potential loss for the year to at least Tk32,000 crore, placing considerable pressure on the government’s finances and BPC’s ability to maintain uninterrupted fuel imports.
BPC has informed the Energy Division that it has received no subsidy from the government since March. The corporation has now sought at least Tk20,000 crore in financial support, warning that without assistance it could become increasingly difficult to finance fuel imports. The agency has also raised concerns about its ability to meet large foreign financing obligations, including loans obtained through the International Islamic Trade Finance Corporation.
BPC Chairman Md Manzur Alam Pradhan said the corporation had already informed the Energy Division about the losses incurred through fuel imports and the resulting financial pressure.
The scale of the losses became increasingly apparent after the conflict began on 28 February. According to BPC’s calculations, losses stood at Tk2,248.37 crore in March, Tk7,866.03 crore in April, Tk2,621.28 crore in May, Tk6,198.58 crore in June and Tk1,125.47 crore in July.
The five-month total therefore reached Tk20,059.73 crore.
One fuel shipment illustrates the extraordinary gap between import costs and domestic selling prices. On 18 April, BPC had to pay Tk270.32 per litre for 33,379 tonnes of diesel carried by the vessel MV Cap Bony. At the time, diesel was being sold domestically at Tk100 per litre.
The difference meant a loss of more than Tk170 on every litre from that shipment alone. BPC calculated its loss on the single consignment at Tk672.65 crore.
Higher international prices threaten further losses
According to preliminary calculations by the Energy Division and BPC, the financial burden could intensify if international oil prices remain elevated through December.
The average purchase cost could reach Tk172.54 per litre for diesel, Tk146 for octane and Tk142 for petrol. At those prices, diesel alone could require a subsidy of more than Tk57 per litre based on prevailing domestic prices.
The projected subsidy requirement for fuel imports between August and December could consequently exceed Tk11,000 crore. The Energy Division has reportedly raised the matter with the Finance Ministry on several occasions.
The situation is particularly challenging because BPC must continue importing large quantities of fuel to meet domestic demand. According to its estimates, the corporation needs to purchase around 665,000 tonnes of diesel, jet fuel, octane, furnace oil, marine fuel, ALC, Marban and liquefied petroleum gas in September, at an estimated cost of Tk8,661 crore.
The projected requirement rises further in the following two months. BPC expects to purchase around 565,000 tonnes of fuel in October at a cost of Tk8,779.32 crore, while purchases could reach 780,000 tonnes in November, costing more than Tk11,432 crore.
The combined fuel bill for September, October and November is therefore expected to be around Tk28,873.43 crore.
BPC’s financial reserves under pressure
BPC said it had previously been able to maintain a relatively strong financial position using profits accumulated over several years. Between Tk35,000 crore and Tk40,000 crore had been deposited in various banks.
However, the corporation said Tk11,000 crore of that money had been taken by the government, while the remaining funds were earmarked for development projects, including the second phase of the Eastern Refinery.
The sharp increase in fuel import costs this year has placed those reserves under severe pressure. BPC is now reportedly finding it difficult to arrange letters of credit for fuel imports, raising concerns about its ability to maintain regular supplies if the financial situation deteriorates further.
A BPC official, speaking on condition of anonymity, said returning the Tk11,000 crore previously taken from the corporation would provide some relief and strengthen its capacity to finance fuel imports.
Government revenue from fuel imports has also risen
While BPC has been absorbing substantial losses, government revenue from taxes and duties on imported diesel has also increased as international prices have risen.
According to the figures provided by BPC, the government collected Tk18.36 per litre in duties and value-added tax on diesel imports in February. The amount increased to Tk38.64 per litre amid higher prices and stood at Tk38.90 in April before falling to Tk29.74 in July.
In April, the total collection of Tk38.90 per litre comprised Tk8.97 in customs duty, Tk23.77 in value-added tax, Tk3.17 in supplementary duty and Tk2.99 in advance income tax.
The figures highlight the competing financial pressures surrounding fuel imports. Higher international prices increase BPC’s purchasing costs, while taxes and duties collected at the import stage also rise with the value of imported fuel.
Three options put forward to keep imports running
In a letter signed by the BPC chairman, the corporation proposed three possible measures to maintain fuel imports and ease the financial strain.
The first is to provide Tk20,059 crore in government subsidy to compensate for the losses incurred since March. The second is to restore fuel-related duties and taxes to their previous rates from March until the conflict ends. The third is to increase domestic fuel prices in line with international market conditions.
BPC has also requested that the Energy Division brief Prime Minister Tarique Rahman on the overall situation surrounding fuel imports.
The corporation’s figures suggest that the issue is no longer limited to the cost of individual fuel shipments. Sustained high international prices could affect BPC’s cash reserves, its ability to open letters of credit, future development spending and the repayment of external financing.
For Bangladesh, the challenge is to keep fuel supplies stable without allowing the cost of absorbing international price shocks to place an unsustainable burden on public finances.
