M AZIZUR RAHMAN |
Nov. 28, 2021, 9:04 a.m.
Nov. 28, 2021, 11:00 a.m.
Global oil prices collapsed over fears of a collapse in demand with the spread of the new Covid variant ‘Omicron’ and the twist gave the state-run Bangladesh Petroleum Corporation (BPC) see its profits increase every day more.
According to the official tally, BPC’s profit now stands at around Tk 25 million per day, an increase of almost three times the amount it would benefit from a few days ago, based on an increase substantial domestic oil prices at the start of the month and the latest drop in tariffs. in the international market.
The government oil marketing agency now makes a profit of around 1.75 Tk per liter in the diesel business, as on November 26, by taking advantage of the double boosters.
In a sudden turn of fortune for oil producers – who have seen economic reopening flourish after prime-time gloom from the global pandemic – price indices have plummeted over fears that the new variant, discovered in southern Africa, will only dampen economic growth and trigger another collapse in demand, market insiders said.
The company’s profit was around 7.50 million Tk per day during the trading session on 23 November, while it was making around 0.50 Tk per liter in diesel sales.
âIf the downward trend in oil prices in the international market lasts for a long time, BPC’s profit margins will also increase,â one insider said.
Brent crude, the benchmark for international oil prices, now hovers around US $ 72.72 per barrel, down from around US $ 82 on November 3, when diesel and kerosene prices were raised by around US $ 23. % at 80 Tk per liter compared to the previous Tk 65 – sparking protests and strikes and spillover effects in commodity market, commerce and life.
With the decline, the international oil price index returned to the June 14 level, when Brent crude was US $ 72.86 per barrel.
The price of Brent crude then climbed to US $ 77.16 on July 5 before falling to US $ 65.18 per barrel on August 20.
After Aug. 20, international oil prices climbed to US $ 85.82 on Oct. 20, the turning point from which they started to fall again, sources said.
After increasing domestic prices for diesel and kerosene, BPC also raised the price of heating oil by around 17% to 62 Tk per liter as of November 5.
It also increased jet fuel prices for domestic flights by 7.79 percent to Tk 77 per liter and for international flights by 5.79 percent to US $ 0.73 per liter.
The state-owned oil company raised oil prices domestically on the grounds that it suffered losses from an overseas recovery, although consumer rights groups opposed.
BPC raised fuel oil prices to a level where it then viewed its budget position as balanced, one of BPC’s sources said.
The rise in oil prices in the domestic market sparked numerous protests, leading to several days of transport strikes, which were called off after the rise in transport tariffs, which is described as a double blow to consumers and economic activities. .
Citizens are still protesting against rising oil prices, and students are now protesting for half of the freight rates. Protests have continued in recent days to put pressure on their demand.
The buses of the state-run Bangladesh Road Transport Corporation (BRTC), however, agreed to halve student transport fares from December 1, but the private owners of the transport have always remained âmomsâ on. the advocacy of the students and insist on a subsidy so that they concede to the half-tariffs.
The Ministry of Energy had however assured to lower oil prices on the domestic market with the fall in world oil prices.
Diesel is the key petroleum product that PCBs most import from the international market. Among other major petroleum products, it also imports a nominal amount of fuel oil and octane to meet local demand.
The prices for octane and gasoline are now 89 Tk and 86 Tk per liter respectively.
The company supplies most of its furnace oil demand to Eastern Refinery Ltd (ERL), which produces approximately 350,000 tonnes of furnace oil per year by refining crude.
Most of the country’s octane and gasoline and kerosene demands are met from ERL production.
Oil prices in the international market had the largest drop during the acute coronavirus pandemic after March 2020. The price of Brent crude was as low as $ 19.33 per barrel on April 21, 2020.
During the fall in prices, the company reported a profit of around 16 Tk per liter of diesel and 5.50 Tk per liter in the trading of the respective petroleum products.
Profit was calculated after deduction of value added tax (VAT) and taxes payable to the National Revenue Office (NBR) on imports.
The company currently imports approximately 5.0 million tonnes of diesel, 1.30 million tonnes of crude oil, 200,000 tonnes of fuel oil and 120,000 tonnes of octane per year.
The BPC alone supplies about 85 percent of the country’s oil needs, with the rest coming from the private sector.
Furnace oil is mainly used in power plants across the country and is largely imported by private power plants.
The private sector imports about 32 million tonnes per year to generate about 5,500 megawatts of electricity. They charge a 9.0% service charge to encourage them to import their own fuel.