Anisul Islam Noor :Oil prices fell below $28 dollar in the international market on Monday, touching their lowest level since 2003.The historic fall in oil prices was followed by the lifting of international sanction on Iran, a key oil exporting nation. When crude oil prices are continued to witness free fall in global market for nearly two years, the government of Bangladesh has been selling oil at the previous import rate of $100 dollar depriving the local consumers to get benefit of falling international oil prices. “We have no plan to cut the domestic fuel prices immediately although their prices came down to $28 dollar on Monday in global market,” State Minister for Power, Energy and Mineral Resources Nasrul Hamid Bipu told The New Nation on Monday. “The decision of oil price cut is largely depend on the government’s high-ups, not my ministry,” he added.Earlier, Finance Minister AMA Muhith on several occasions hinted that the government would cut the domestic fuel prices on account of their drastic fall in global market.But, the government is yet to come up with the step drawing criticism from business community and consumers’ right group. Petroleum Corporation (BPC) said it gained a profit of Tk 15 to Tk 40 per litre by selling various petroleum products. However, sources said the profit margin is much higher.BPC settled all of its debts to the banks and other financial institutions from the profit it earned on petroleum products after the price fall in the international market. However, the finance ministry has now asked the organisation to return the subsidy it has paid so far.BPC chairman A M Badrudduja said this amounted to Tk 26,300 crore. If it has to be repaid, the oil price should remain at the current level for at least the next four years. That is why the government is not ready to decrease the oil price. In the meantime, BPC cannot enjoy full benefit of the low oil prices in the international market due to the purchasing procedure. BPC buys oil under the current long term Government to Government (G2G) system. The buying price of BPC has a big difference with the lowest international price because of this system. The government has decided to change the buying system to decrease the gap to the lowest. Now the oil will be brought through open tender instead of the existing G2G system. Half of the oil imported by BPC this year (2016) will be brought under the new system.BPC procures crude oil only from Saudi Arabia and United Arab Emirates (UAE). The oil price of that country on the day when the oil is loaded on ships is counted as the oil price of BPC. BPC last brought the crude oil on 28 November. Every oil barrel loaded in the ship from Mardan port of Abu Dhabi cost US $ 43.55. Premier of US $ 4.4 will be added with each barrel. Asked about how much profit BPC earns from different petroleum products, after importing refined, and crude oil as well as buying from the local refiners and distributing through the three distribution companies, BPC chairman said the company is earning profit of Tk 40 from per litre octane, Tk 35 from per litre petrol, Tk 20 from diesel and kerosene, and Tk 15 from furnace oil. However, the profit is much higher unofficially. Per litre of the furnace oil is costing Tk 25 imported for the private power plants where BPC is selling the furnace oil to other power plants at Tk 62 per litre. The government paid tax and VAT from that money.Other than that, BPC last imported diesel on 21 December which was priced Tk 40 per litre including the tax, VAT, and the commission of the distribution company. And it is selling per litre of diesel at Tk 68. But no money was paid back to the finance ministry.According to the power and energy ministry, BPC, and other experts, the purchase of petroleum products has such technicality that it is not possible to assure achieving the lowest international price by just changing the purchase system. Nasrul Hamid said, the purchase of oil through open tender is at an experimental stage. The system will continue once it succeeds. Steps have been taken to increase the oil import through private sector. Talking about importing oil in new system, BPC chairman A M Badrudduja said they received the government directives to import half of the total oil import of BPC through open tender system. They also started taking preparation for this.If purchased through open tender: Energy sector expert and former BPC chairman Muktadir Ali said though brought through open tender system, the oil price will be only determined by the five days average of oil price published in the Platts. But the premier, insurance and other things will cost less in this case. The way BPC fixes the premier and does agreement for six months, it assures the ship owner business for six months and BPC also gets confirmation of getting the ship at the right time. There is no guarantee for both the ship owner and customer in the open tender system. Sometimes the ship costs might be high after the oil is bought. And sometimes, oil is available at low price in Singapore market.
