For the current 2024-25 fiscal year, Bangladesh Petroleum Corporation (BPC) estimated the average price of crude oil in the international market to be around $122 per barrel. However, the current global average price hovers around $80 per barrel, with projections indicating a further decrease. Despite the downward trend in the international market, fuel prices in the domestic market are yet to be reduced. On the contrary, BPC officials claim that if the current price trend continues, the corporation may incur losses.

Contradicting this stance, experts argue that the international price of crude oil is significantly lower than BPC’s estimates, leading to reduced import costs for BPC. Yet, instead of offering fuel at a more affordable price to consumers, BPC seems more focused on profitability. Concerns have also been raised regarding the lack of transparency in BPC’s profit-loss estimates. The interim government should abandon the practices of the previous administration and ensure that fuel is made available to the public at a reasonable price.

In the revised budget for the last fiscal year (2023-24), BPC had estimated the import price of fuel at $128.34 per barrel. However, by March of that fiscal year, the average import cost per barrel was just over $103. During this period, BPC made a net profit of BDT 38.41 billion from fuel sales. For the current fiscal year (2024-25), the estimated import price of crude oil, known as Cost & Freight (C&F), has been set at $121.91 per barrel. However, the two primary benchmarks, Brent and West Texas Intermediate (WTI), are currently trading at $81.19 and $77.15 per barrel respectively in the global market. Meanwhile, the price of refined fuel (gas oil) stands at $116 per barrel. The cost of importing crude oil for BPC has decreased by more than 17 percent compared to the previous fiscal year.

BPC claims that the current international market prices do not allow the corporation to break even. If prices remain stable at this level, BPC might incur some losses in the upcoming fiscal year.

Md Amin Ul Ahsan, Chairman of BPC, told Bonik Barta, “If the current prices of refined and crude oil in the international market remain stable, selling fuel according to the formula could result in some losses for BPC by the end of the fiscal year.” When asked about the possibility of reducing fuel prices, he said, “The current price will remain as it is for now. The Energy Division will seek input from BPC, and we will provide it accordingly. The government will then make the final decision.”

Experts disagree with BPC’s claims, pointing out that the corporation frequently projects significant losses in its annual budgets. This is due to incorporating various expenses that are later added to the fuel prices, ultimately burdening consumers. In the 2023-24 fiscal year alone, BPC earned BDT 38.41 billion in profit, despite an initial forecast of a loss exceeding BDT 100 billion. In the 2022-23 fiscal year, BPC had projected a loss of BDT 79.85 billion from fuel sales, yet it recorded a profit of BDT 45.85 billion by the end of the fiscal year. For the current 2024-25 fiscal year, BPC has again forecasted a loss of BDT 55.63 billion from fuel sales. However, the actual scenario is expected to be the complete opposite of these projections.

Bangladesh Petroleum Corporation (BPC) employs a pricing formula for fuel that includes ten different cost factors. From the refinery to the consumer level, BPC adds costs for its development fund, marketing margins, transportation funds, and dealer agent commissions. Additionally, BPC incorporates a substantial profit margin. Despite the government's imposition of VAT, taxes, and other ancillary costs on consumers, energy experts have questioned the fairness and ethicality of such a high-profit margin.

According to them, this margin is preventing a reduction in fuel prices in the domestic market. They argue that the automatic pricing mechanism introduced by the energy division should be reviewed through a public hearing by the Bangladesh Energy Regulatory Commission (BERC). As global fuel prices continue to decline, reducing BPC’s profit margin could allow consumers to access fuel at more affordable prices domestically. They also noted that as a state-owned enterprise, there is no justified reason for BPC to chase excessive profits beyond covering operational costs after settling taxes and VAT with the government.

Energy expert and BUET Professor M. Tamim told Bonik Barta, “BPC is not incurring any losses from selling petrol or octane. They claim losses on diesel, but consumers have no way to verify this. A review of BPC's financial statements at the end of the fiscal year reveals that they are not losing money on fuel sales. The energy division has implemented a pricing formula for fuel, and the market follows this. For the sake of transparency, BERC could discuss BPC’s pricing formula in a public hearing. This would allow consumers to understand the actual costs of the products they purchase, similar to the process used for determining LPG prices. By ensuring a transparent process, fuel prices in the market could be reduced. The government has handed over the price-setting authority to BERC after abolishing its own pricing mechanism. It remains to be seen what BERC will do now.”

The previous government adjusted fuel prices between March and June of this year in line with international market trends. Under the automatic pricing formula, the prices of diesel, kerosene, petrol, and octane fluctuated slightly. However, the interim government, after assuming power, suspended the pricing decisions for gas and electricity and announced that the fuel price-setting would also remain on hold for the time being.

Since the 2014-15 fiscal year, BPC has consistently made profits from fuel sales. From that time until the 2022-23 fiscal year, the corporation made over BDT 475 billion in profits. The only exception was the 2021-22 fiscal year, when BPC reported a loss of BDT 27.06 billion.

According to BPC’s pricing formula, the price of octane should always be BDT 10 higher per liter than that of diesel and kerosene. However, diesel is currently sold at BDT 107.75 per liter, while octane is priced at BDT 131 per liter, resulting in a price difference of BDT 23.25 per liter. Two senior officials from the energy division commented that BPC incurs no losses on octane or petrol. Any losses on diesel are offset by the profits from petrol and octane.

In the 2022-23 fiscal year, BPC initially projected a loss of around BDT 33.65 billion in its approved budget. However, in the revised budget, this figure was increased to BDT 79.85 billion. Despite this, by the end of the fiscal year, BPC’s total pre-tax profit was BDT 62.96 billion, with a net post-tax profit of BDT 45.86 billion. During this period, BPC deposited around BDT 154.92 billion into the national treasury from various sources, including import duties, VAT, dividends, and income tax. At the start of the 2023-24 fiscal year, BPC projected a loss of BDT 101.9 billion from fuel sales. However, the finance ministry’s revised budget estimates a profit of BDT 38.41 billion for the corporation. This suggests that BPC’s total projected profit for the past two fiscal years amounts to BDT 84.27 billion.