The Energy Ministry last week sent a detailed report to the Ministry of Finance (MoF) spelling out the significance of declining oil prices in the international market and fiscal health of state-run Bangladesh Petroleum Corporation (BPC).
The Ministry of Power, Energy and Mineral Resources (MPEMR) submitted the report in response to a letter from the MoF.
Sources informed, the government made the analysis meant for readjustment of the fuel prices with its procurement costs by taking its latest payments.
In the report, the Ministry also pointed out the government’s subsidy to the BPC over the past years when oil prices in international market were higher.
BPC has been making profit since the last fiscal year because of low petroleum prices in the international market and retaining its high prices in the domestic market. The BPC’s profit has soared to a new high on the back of recent drastic fall in fuel prices in the international market.
According to the analysis prepared by the ministry concerned last week, import of diesel costs Tk 21 per litter, but the retail price is Tk 68. Octane is imported at Tk 60 per litter but its retail price is Tk 99.
In the meantime, the payment for the second largest finished product of Jet fuel is $ 43 inclusive $4.5 premiums each barrel. It means that it costs over Tk 21 per litter but retail level for domestic airlines the costs is Tk 74 per litter.
The BPC paid $ 43 a barrel for crude in its latest payment. The price of crude is based on FOB (free on board).
A Finance Ministry official said, Ministry will evaluate the energy ministry’s report to prepare recommendations for possible cut in domestic oil prices.
He added, Finance Minister AMA Muhith and State Minister for the MPEMR Nasrul Hamid will place the recommendations to Prime Minister Sheikh Hasina for approval before passing any executive order over the price cut.
The government last made changes to the domestic oil prices three years back, on January 04, 2013. At that time, it raised the prices by up to 11.47 per cent to offset the then losses incurred by the BPC.
Oil prices on the international market have been on a downward turn since June 2014. But the government kept the domestic oil prices unchanged to allow the BPC to make profit.
Bangladesh is among a very few countries that kept the domestic oil prices higher despite drastic fall in international prices.