BPC Accused of Overcharging PDB by 644 crore BDT

The Bangladesh Petroleum Corporation (BPC) is facing intense scrutiny following allegations that it overcharged the Power Development Board (PDB) by approximately 644 crore BDT for furnace oil over the past eighteen months. This revelation came to light during a public hearing organised by the Bangladesh Energy Regulatory Commission (BERC) on Thursday, where the PDB challenged the BPC’s rigid pricing structure amidst a global decline in fuel costs.

A Disconnect from Global Markets

While international oil prices have fluctuated and generally trended downwards, the BPC has maintained its domestic furnace oil price at 86 BDT per litre since August 2024. In stark contrast, private power producers—who are permitted to import their own fuel—have been securing oil at significantly lower rates. The PDB, which relies on the BPC for its supply to state-run plants, argued that this lack of price adjustment has placed an unjustifiable financial burden on the nation’s power sector.

During the hearing, PDB Chairman Md. Rezaul Karim highlighted the stark disparity:

“Importing fuel independently is far more cost-effective. Purchasing from the BPC has artificially inflated the cost of electricity generation. It is high time prices are synchronised with the global market to provide relief to the public.”

Financial Disparity and Subsidy Strain

The financial health of the two state entities presents a study in contrasts. In the 2024-25 fiscal year, the BPC reported a robust profit of 4,316 crore BDT. Conversely, the PDB remains in a precarious position; despite receiving a government subsidy of 38,637 crore BDT, it still incurred a staggering loss of 17,021 crore BDT.

PDB Director Jahangir Alam Molla warned that if furnace oil prices are not slashed, the country faces a potential power crisis during the upcoming summer months when demand peaks.

Proposed Pricing Adjustments

The BPC and its four marketing subsidiaries—Padma, Meghna, Jamuna, and Standard Asiatic Oil—have proposed a modest reduction to 81 BDT per litre. However, a BERC technical committee suggested a deeper cut to 74.04 BDT. The PDB has rejected both, asserting that based on current market data, the price should ideally be set at 50.83 BDT per litre.

Comparative Analysis of Proposed Furnace Oil Prices

The Push for Higher Margins

In a move that drew further criticism, state-owned marketing firms like Padma Oil requested an increase in their distribution margins from 55 paisa to 1.20 BDT, claiming they were operating at a loss on furnace oil sales. This was met with skepticism after Padma Oil admitted during questioning that their overall corporate profits had actually increased compared to the previous year.

BERC Chairman Jalal Ahmed concluded the hearing by assuring stakeholders that all data would be meticulously analysed. “We will ensure an order that balances the interests of all parties,” he stated, noting that written submissions will be accepted until 3 February.