BPC, finance ministry profit accounts differ by Tk 38.58 billion

BPC’s account differs with that of the finance ministry - a revelation amid a fuel price hike

The amount of profits shown by Bangladesh Petroleum Corporation or BPC differs by a huge margin with the one released by the finance ministry.

According to the Finance Division’s Bangladesh Economic Review 2022, the state-owned corporation made Tk 468.58 billion in profits from 2014-15 fiscal year to 2020-21.

But BPC Chairman ABM Azad said at a press conference on Wednesday they made a profit of Tk 429.98 billion.

The difference between the two accounts is Tk 38.58 billion.

This comes amid criticisms of the government for an unprecedented hike in fuel oil price by as much as 51.68 percent.

Analysts say the government should not have increased the prices because BPC made huge profits in recent years.

And such a gap between data provided by government offices is rare.

Azad faced questions about the issue at the press conference. “I’ve downloaded [the Economic Review] today. The information you are giving is not there. Please show me if it is there. I will surely clarify.”

“I don’t have anything to justify the information now. I may be able to talk about it if you give me the basis of the information,” he said, shuffling through a pile of paper in front of him.

Analyst Ahsan H Mansur sees no room for such a mismatch of data. Speaking to bdnews24.com, he said the accounts in question should be audited by the Comptroller and Auditor General.

Mansur, executive director of Policy Research Institute and chairman of BRAC Bank, criticised the government for a “lack of transparency” in accounts of revenues and expenditure. “The government should reveal everything to the people because these are public funds.”

All activities related to import, storage, marketing, distribution of petroleum products in Bangladesh are supervised, coordinated and controlled through BPC, which is a statutory body under the Ministry of Power, Energy and Mineral Resources.

The company, which had been dependent on subsidies due to losses year after year, has turned around and made profits in recent years, especially at the beginning of the COVID-19 pandemic when fuel oil prices plunged in the international market.

But when the Russia-Ukraine war broke out earlier this year, BPC's skyrocketing profits began to unravel.

Crude oil in the world market last December, which was $65 per barrel, increased to more than $120. Now it has come down below $100, but the government's expenditure on oil import has increased more than before.

As a result, diesel prices were increased by 42 percent and petrol-octane prices by 51 percent to ease the pressure created by subsidies amid dwindling dollar reserves. Citing the global crisis, the government has said it had no alternative to raising the prices.

WHY RAISING PRICE AMID GLOBAL FALL?

Asked why they decided to raise the prices amid a fall in the international market, BPC Chairman Azad suggested BPC would count a Tk 390 million loss in August if it pays for dollars at the current market rate.

It will be an over Tk 2 billion profit if it pays at the government-fixed rate, he said. “We are paying at the market rate.”

Citing data from Platts Market Centre, he said the price of refined oil was $126.59 per barrel on an average in the first eight days of August. A premium of $11 per barrel, taxes, and commission for the dealer will be added to the price.

In line with this account, the cost of petrol is Tk 120.16 per litre, which Azad said means BPC has suffered a Tk 6 loss for each litre. The price has been raised to Tk 130 per litre.

But in the case of octane, BPC will make a profit of Tk 25 per litre.

However, petrol was 6 percent of BPC’s total sale of 6.3 million tonnes in 2020-21 and octane was 5 percent.

Diesel is the most used fuel oil in Bangladesh. As many as 73 percent of BPC’s total sales last fiscal year was diesel.