The Bangladesh Petroleum Corporation (BPC) has fallen into a major financial crisis due to the shock of abnormal price hikes of fuel in the international market. To cover the huge losses incurred by the agency in importing fuel oil over the past four months, a subsidy of more than Tk 18,699 crore has been sought from the government. Based on the loss calculations for the four-month period from March to June, the Ministry of Power, Energy and Mineral Resources has requested this fund from the Ministry of Finance.
BPC is the primary government institution responsible for importing, storing, marketing, and distributing fuel oil in the country. The profitability of the organization mainly depends on the difference between the domestic sales price and the international market prices of crude and refined oil, transportation costs, freight charges, insurance, and other import expenses.
In recent years, BPC made significant profits as oil prices in the international market remained relatively stable and low. However, the situation changed rapidly after the conflict between the United States and Israel surrounding Iran intensified. Due to the impact of the war, alongside the rise in fuel oil prices in the international market, transportation and war-risk insurance costs also increased. On the other hand, because prices were not adjusted at the same rate in the domestic market, BPC had to sell fuel oil at prices lower than the import costs.
According to BPC's calculations, the average import cost per barrel of diesel was about 86 US dollars before the war. In June, it rose to nearly 120 dollars. During the same period, the price of octane also went up from 73 dollars to 104 dollars per barrel. Although the market provided some relief in late June, new tensions in July caused the oil market to start rising again.
This situation had a direct impact on BPC's expenditures. Due to the Iran-US conflict, ship movement in the vital Hormuz Strait of the Persian Gulf was disrupted, increasing the risk of oil transportation. Consequently, alongside the rise in crude oil prices, freight, insurance, and transportation costs also went up. Because of Bangladesh's reliance on Middle Eastern energy imports, it experienced a widespread impact as well.
Earlier, during the period of soaring prices in the international market, BPC had sent a letter claiming a subsidy from the government. In that letter, the agency stated that while diesel was being sold locally at Tk 100 per liter, its import cost was Tk 203.84, resulting in a loss of Tk 103.84 per liter. A similar pressure was created in the case of octane. Although octane was sold at Tk 120 per liter, the import cost was Tk 151.61, causing a loss of Tk 31.61 per liter.
At that time, the agency informed the ministry that if prices were not adjusted, BPC's potential losses could exceed Tk 30,561 crore. Later, on April 19, the government increased fuel oil prices. However, even after the price hike, BPC's losses did not stop as the situation in the international market was not completely normalized. Under these circumstances, a fresh subsidy has been sought based on the loss calculations for the four months from March to June.
According to a letter from the Ministry of Power, Energy and Mineral Resources dated July 28, BPC's loss in March was Tk 2,248 crore. In April, the amount of loss stood at Tk 7,866 crore. The loss was Tk 2,621 crore in May and Tk 5,963 crore in June. Altogether, BPC's total loss over the four months stood at Tk 18,699 crore 31 lakh. The ministry's letter stated that although fuel oil prices in the international market increased significantly due to the war, prices were not adjusted proportionally in the domestic market. With the objective of ensuring supply and not placing the entire pressure on consumers, the government is handling the situation through subsidies. For this reason, the Ministry of Finance has been requested to take necessary arrangements to provide BPC with a subsidy of Tk 18,699 crore 31 lakh against the purchase of fuel oil from March to June.
Large Profits in Previous Years
Despite facing massive losses, BPC's financial position was quite strong in recent years. In the 2024-25 fiscal year, the agency made a net profit of Tk 4,216 crore by selling fuel oil. In the preceding 2023-24 fiscal year, this profit amount was Tk 3,943 crore. This means BPC's profit increased by Tk 273 crore in a single year.
