BPC hopeful of making profit

The Bangladesh Petroleum Corporation (BPC) hopes to make a profit if domestic oil prices remain unchanged.

Chairman of the state-owned corporation Yunusur Rahman expressed the hope while speaking to bdnews24.com on Tuesday.

“The prices of oil for which we’re opening LCs now are far less than the previous rates. This oil will take 30-35 days to reach the country. We can make profit if (domestic) oil prices don’t drop by this time,” he said.

BPC, which has a long history of sustaining losses, has not been in the red since October this year as petroleum prices have dropped in the international market but has remained unadjusted in the domestic market.

The government has been hugely subsidising oil .to make it available to all at rates lower than international market prices.

Economists think the money that the government can save from subsidy will contribute to tackling inflation.

According to the Bangladesh Economic Survey 2014, the BPC has been counting losses barring in 2008 and 2009, when a caretaker government was in office.

The government provided the corporation Tk 6 billion in subsidy even in the first three months of the current fiscal year that began
on July 1.

BPC Chairman Rahman said they had not taken any money from the government in subsidy since October, as the oil prices had dropped in the international market.

“We won’t need to take any more money during the rest of the current financial year,” he added.

Crude oil is now selling at $70-71 a barrel in the international market against $110 in September this year.

According to the Bangladesh Bank, the BPC opened LCs worth $1.77 billion in the first four months of the current FY for oil imports. The figure is 20 percent less than that in the same period in the previous fiscal.

The BPC chief said oil imports had dropped in value terms and not by way of quantity.

Asked if the domestic prices would be adjusted with the international rates, he said: “It’s a matter to be decided by the high-ups of the government. It’s beyond our jurisdiction.”

Economists consider the respite from providing subsidy on oil a matter of comfort for the economy.

They say the government can now use the money saved from oil subsidy in other areas.

The Bangladesh Institute of Development Studies (BIDS) Research Director Zaid Bakht told bdnews24.com: “The BPC used to sustain huge losses every year. If the government does not need to provide subsidy this year, it can use the surplus money for other development activities.”

Bakht, also chairman of Agrani Bank, said the money would help the government to tackle anticipated inflation likely to arise following the salary hike of government employees.