The government is once again going to Increase prices of petroleum products, this time by at least 30 per cent, on the pretext that crude price in international market has gone up.
The decision may be announced this week, sources said.
The government had increased prices of petroleum products by about 60 per cent in 1997 showing the same reason.
Justifying the planned price hike this time. Bangladesh Petroleum Corporation (BPC) officials claimed that price of crude rose to 27 US dollars per barrel in the International market.
The trend may continue up to March next year and in that case. BPC will incur a loss of Tk
800 crore by that time, the sources claimed. BPC imports crude and refined petroleum products.
Further justifying the price hike, (hey said since 1990. Taka has been devaluated by big proportions but prices of petroleum products have not been increased ■significantly”. Besides, tax on oil Import has also been increased 4.5 times, they said.
But oil industry sources rejected the BPC’s claim and termed the planned price hike a “blatant attempt for profiteering” by both the BPC and the government.
They said crude price remained at 21 US dollars per barrel in the international marker in the last two weeks and it is showing a downward
trend. The highest price in recent times was 23 dollars, they said.
On August 21. 1997. three ministers at a press conference announced the government decision of a massive increase in the prices of petroleum products on the pretext that the international oil price was soaring. They had said that BPC was incurring loss.
The ministers had claimed that the international oil price rose to 27 dollars per barrel from 17-18 dollars and as a result BPC Incurred Tk 450 crore loss.
In 1997. prices of petrol and octane were increased by 60 per cent to Tk 2land Tk 23 per litre respectively from around Tk 13 and Tk 14. Diesel price was
however increased by Tk 0.5 per litre only.
The three ministers -- the then Energy Minister Noor Uddin Khan. Industries Minister Tofael Ahmed and Finance Minister SAMS Kibrla - had promised at the press conference that local prices would be reduced when prices in the world market fall. But the promise was never kept.
"The present prices of petroleum products are already irrationally high and these cover the so-called price hike in the International market. In 1997, they had claimed that international oil price was 25 dollars. and enhanced the price massively. Now also, they are saying that oil price is 27 dol-
lars and going to enhance Ihe local price." commented a source. “Even if the present international price is as high as the BPC Is claiming, it should be covered by the local rates."
Terming the BPC move ■outrageous", he said BPC should not incur loss. Rather. It should be making more than 200 per cent profit, defying all business ethics. "If it incurs loss, an investigation should be carried out to see if there is massive corruption there." the source commented.
Oil price in the international market rallied around 15-16 dollars during early last year and then started falling sharply. In the following months, ihe price of Arab-Gulf crude (imported by Bangladesh) fell to 10-12 dollars a barrel and the trend continued. It dropped to 8-9 dollars in November December last year. The price rose again but till June-July this year, it did not exceed 16 dollars per barrel.
From July, the price showed an upward trend but it hardly exceeded 20 dollars, the sources said.
The BPC Imports oil in two ways. It imports refined petrol, motor spirit. Jet fuel, kerosene, and diesel on half yearly basis. In this way. It has already imported petroleum products to meet the demand for July-De-
cember period this year. BPC also imports oil in small quantities to meet emergency needs.
The BPC seldom makes any loss despite its poor market mechanism. "This is mainly because of the government controlled pricing system in which supply and demand de not de lermine oil price." said an official.
In 1997. while the govern inent claimed that BPC incurred Tk 450 crore loss for petroleum import and sale. BPC gave Tk 1800 crore to the national exchequer as taxes.
"It shows why the govern ment is reluctant to reduce oil prices. Government s revenue earnings from other seclors are in bad shape for the last two years. So it is desperately squeezing out money from oil import as imports continue to increase due to growth in the transport sector." said a source.
BPC made a net profit of Tk 133 crore in fiscal 95-96. He 241 crore in 94-95. Tk 919 crore in 93-94. Tk 769 crore in 92-93 and Tk 789 crore in 91-92. Last year's loss was an exception in decades.
Till 1997. the price of petrol was never more than Tk 14 per litre.
The country's annual requirement is about 16 lakh tonnes of diesel. 4.5 lakh tonnes of kerosene, two lakh tonnes of petrol and one lakh tonnes of Octane.
BPC imports about 1.2 million tonnes of crude oil and refines it at its processing plant to get diesel and other petroleum products. It also imports 1.8 million tonnes of petrol and diesel and other petroleum products. The country usually spends around Tk 2500 crore for these imports.