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Bangladesh Petroleum Corporation Getting Bankrupt
Energy Bangla - Bangladesh Petroleum Corporation Getting Bankrupt
Engr. Khondkar A Saleque
Wednesday, 09.14.2011, 02:36pm (GMT)
Bangladesh Petroleum Corporation responsible for import and marketing of Petroleum Products in Bangladesh is gradually sliding into bankruptcy. Wrong vision and flawed policy of the Ministry of Power, Energy and Mineral resources is increasing its debt burden to uncontrollable level. It is losing its credit worthiness increasingly. Over the last two and half years of the present government the demand of imported liquid fuel has increased tremendously due to over-reliance on liquid fuel for power generation, control of CNG use for Gas demand management , increase of use of liquid fuel in automobiles for traffic jam and terrible conditions of countrywide Roads and Highways.BPC has to buy liquid fuel from volatile oil market at higher price and sell at much lower price.BPC in August 2011 wrote to Ministry of finance for quickly releasing the four thousand crore taka subsidy to confront the liquidity.BPC also informed the Energy ministry earlier about its crisis situation.BPC Chairman Mr. Muktadir Ali informed media that in 2010-2011 financial year BPC incurred a net loss of Tk 8,000 Crores .The loss is compounding every year. If the price of petroleum products are appropriately adjusted BPC must be given the required subsidy.BPC usually takes loan from commercial banks for buying fuel. Our credit limit is TK 8,000 Crores. Currently our accumulated loans have peaked credit limit .Hence we have no opportunity this year to take more loans or increase debt burden.BPC had to account for a net loss of TK Eight Thousand One hundred ninety eight crores and Thirteen lakh [ 8,198 Crores and 13 Lakh ] in 2010-2011.Of these 6695 Crores and 11 Lakh taka was BPC lost from selling of refined refined petroleum products and Tk 1503 Crores and 2 Lakh from Crude Oil sale.BPC was provided with Tk 4 Thousand Crore as subsidy in 2010-2011. BPC now requested Finance Ministry to quickly release the remaining 4198 Crores 93 lakh Taka subsidy to meet BPCs debt liability. The loss of BPC is cumulating for not adjusting fuel price in the domestic market commensurate with international market.
The following statement gives and account of loss of BPC Month wise.
Months
Loss TK
August 2010
152 Crore 48Lakhs
September 2010
151 Crore 05Lakhs
October 2010
243Crore 49Lakhs
November 2010
339Crore 35Lakhs
December 2010
437 Crore 55Lakh
January 2011
668Crore 02Lakhs
February 2011
828 Crore 19Lakhs
March 2011
1438 Crore 58Lakhs.
April 2011
1791 Crore 05Lakhs
May 2011
1042 Crore 21Lakhs
June 2011
977 Crore 38 Lakhs
BPC source informed media that Finance ministry provided TK 1452 Crores on March 2, 2011 to adjust the BPC loan from July 2010 to December 2010. BPC will have to account for 3% Annual interest on 20 years term loan. The Accumulated loan of BPC from January 2011 March 2011 stood at Tk2934Crore 79 Lakhs Finance Ministry again provided TK 2548Crore on 29th May with 5% interest on a 20 years repayment term with a grace period of 5 years. So in two phase total loan to BPC accumulated to Tk 4000 Crores. BPC Chairman in his letter to Energy Ministry the BPCs effective Capital for import of liquid Petroleum reduced to a negative state due to sustained loss. Consequently there is no scope of creating new debt burden through taking loans by Overdraft or PAD [Loan against LC.] from Nationalized Banks. BPC is encountering problems in meeting the expenses of LC to for cargo clearance to ITFC [ A sister concern of Islamic Development Bank] .For every liter of Diesel, Kerosene , Octane and Furnace Oil BPC is losing TK 24.82, TK 28.60, TK 2.77 and Tk 18.57 respectively.
The above table indicates that demand of imported petroleum products suddenly increased from the last months of 2010. Several imported oil based contingency power plants were set up at that time. Government must not have taken responsibility of fuel supply. Some investors however failed to implement projects in time. The fuel demand will increase faster when all rental plants will come on stream. That will increase loss of BPC .BPC will not be able to import petroleum products from international market if the subsidy from Ministry of Finance is not released expeditiously.
Can this situation be prolonged indefinitely? Contingency actions for power generation over the last two years and a half failed to make any positive impact on the overall power value chain. Nation still suffers from chronic power load shedding. Government for reasons unknown is still sitting on Coal exploration in the name of Coal Policy formulation. If Government could start coal mining from late 2009 by this time some coal based power plants could be at final stage of construction. By 2014 Bangladesh could have about 1000-1500 MW mine mouth coal fired plants which could create lot of comfort for the Government in the next general election. Government also failed to increase gas production meaningfully to ensure increased supply of gas to Gas based plants. Neither could it create required Gas transmission infrastructures to evacuate gas from gas fields to growth centers. For wrong policy and failed management one after another SOEs are thrown into crisis .Substantial high quality coal lying buried for lack of political commitment while national economy is bleeding from power load shedding and uncalled burden on national exchequer triggered from excessive use of imported fuel. Whose purpose Government is serving here- People or energy mafia syndicate?
Liquid fuel based power plants have created liquidity crisis for BPC and BPDB. This should give wake up call to policy makers. Can Bangladesh sustain imported coal based power plants or LNG import? Policy makers must give second thought and act positively to give go ahead to mining of own coal and expedite exploration of Petroleum without bothering for agitations by a misguided citizens group.
******Engr. Khondkar A Saleque, PE & FIEB, NRB Energy Professional.
Energy Bangla - Bangladesh Petroleum Corporation Getting Bankrupt
Engr. Khondkar A Saleque
Wednesday, 09.14.2011, 02:36pm (GMT)
Bangladesh Petroleum Corporation responsible for import and marketing of Petroleum Products in Bangladesh is gradually sliding into bankruptcy. Wrong vision and flawed policy of the Ministry of Power, Energy and Mineral resources is increasing its debt burden to uncontrollable level. It is losing its credit worthiness increasingly. Over the last two and half years of the present government the demand of imported liquid fuel has increased tremendously due to over-reliance on liquid fuel for power generation, control of CNG use for Gas demand management , increase of use of liquid fuel in automobiles for traffic jam and terrible conditions of countrywide Roads and Highways.BPC has to buy liquid fuel from volatile oil market at higher price and sell at much lower price.BPC in August 2011 wrote to Ministry of finance for quickly releasing the four thousand crore taka subsidy to confront the liquidity.BPC also informed the Energy ministry earlier about its crisis situation.BPC Chairman Mr. Muktadir Ali informed media that in 2010-2011 financial year BPC incurred a net loss of Tk 8,000 Crores .The loss is compounding every year. If the price of petroleum products are appropriately adjusted BPC must be given the required subsidy.BPC usually takes loan from commercial banks for buying fuel. Our credit limit is TK 8,000 Crores. Currently our accumulated loans have peaked credit limit .Hence we have no opportunity this year to take more loans or increase debt burden.BPC had to account for a net loss of TK Eight Thousand One hundred ninety eight crores and Thirteen lakh [ 8,198 Crores and 13 Lakh ] in 2010-2011.Of these 6695 Crores and 11 Lakh taka was BPC lost from selling of refined refined petroleum products and Tk 1503 Crores and 2 Lakh from Crude Oil sale.BPC was provided with Tk 4 Thousand Crore as subsidy in 2010-2011. BPC now requested Finance Ministry to quickly release the remaining 4198 Crores 93 lakh Taka subsidy to meet BPCs debt liability. The loss of BPC is cumulating for not adjusting fuel price in the domestic market commensurate with international market.
The following statement gives and account of loss of BPC Month wise.
Months
Loss TK
August 2010
152 Crore 48Lakhs
September 2010
151 Crore 05Lakhs
October 2010
243Crore 49Lakhs
November 2010
339Crore 35Lakhs
December 2010
437 Crore 55Lakh
January 2011
668Crore 02Lakhs
February 2011
828 Crore 19Lakhs
March 2011
1438 Crore 58Lakhs.
April 2011
1791 Crore 05Lakhs
May 2011
1042 Crore 21Lakhs
June 2011
977 Crore 38 Lakhs
BPC source informed media that Finance ministry provided TK 1452 Crores on March 2, 2011 to adjust the BPC loan from July 2010 to December 2010. BPC will have to account for 3% Annual interest on 20 years term loan. The Accumulated loan of BPC from January 2011 March 2011 stood at Tk2934Crore 79 Lakhs Finance Ministry again provided TK 2548Crore on 29th May with 5% interest on a 20 years repayment term with a grace period of 5 years. So in two phase total loan to BPC accumulated to Tk 4000 Crores. BPC Chairman in his letter to Energy Ministry the BPCs effective Capital for import of liquid Petroleum reduced to a negative state due to sustained loss. Consequently there is no scope of creating new debt burden through taking loans by Overdraft or PAD [Loan against LC.] from Nationalized Banks. BPC is encountering problems in meeting the expenses of LC to for cargo clearance to ITFC [ A sister concern of Islamic Development Bank] .For every liter of Diesel, Kerosene , Octane and Furnace Oil BPC is losing TK 24.82, TK 28.60, TK 2.77 and Tk 18.57 respectively.
The above table indicates that demand of imported petroleum products suddenly increased from the last months of 2010. Several imported oil based contingency power plants were set up at that time. Government must not have taken responsibility of fuel supply. Some investors however failed to implement projects in time. The fuel demand will increase faster when all rental plants will come on stream. That will increase loss of BPC .BPC will not be able to import petroleum products from international market if the subsidy from Ministry of Finance is not released expeditiously.
Can this situation be prolonged indefinitely? Contingency actions for power generation over the last two years and a half failed to make any positive impact on the overall power value chain. Nation still suffers from chronic power load shedding. Government for reasons unknown is still sitting on Coal exploration in the name of Coal Policy formulation. If Government could start coal mining from late 2009 by this time some coal based power plants could be at final stage of construction. By 2014 Bangladesh could have about 1000-1500 MW mine mouth coal fired plants which could create lot of comfort for the Government in the next general election. Government also failed to increase gas production meaningfully to ensure increased supply of gas to Gas based plants. Neither could it create required Gas transmission infrastructures to evacuate gas from gas fields to growth centers. For wrong policy and failed management one after another SOEs are thrown into crisis .Substantial high quality coal lying buried for lack of political commitment while national economy is bleeding from power load shedding and uncalled burden on national exchequer triggered from excessive use of imported fuel. Whose purpose Government is serving here- People or energy mafia syndicate?
Liquid fuel based power plants have created liquidity crisis for BPC and BPDB. This should give wake up call to policy makers. Can Bangladesh sustain imported coal based power plants or LNG import? Policy makers must give second thought and act positively to give go ahead to mining of own coal and expedite exploration of Petroleum without bothering for agitations by a misguided citizens group.
******Engr. Khondkar A Saleque, PE & FIEB, NRB Energy Professional.
