The New Nation - Internet Edition

Staff Reporter

The Bangladesh Petroleum Corporation (BPC) has decided to ask the interim Government to review its energy subsidy policy under a mounting financial burden.

Chairman BPC Anwarul Karim said the state-owned entity had finalised a proposal urging the review. It will be forwarded to the Energy and Mineral Resources Ministry within this week, he said.

"The government is giving equal subsidies to all consumers. It should be reviewed whether it is right to give subsidies this way," Karim said.

According to him, it was the Government's discretion to decide how and to whom they provided subsidies. "It should be done in a way which would give subsidies a target group of people," he added.

The prices of refined diesel have crossed the US$118 per barrel mark in Kuwait on Tuesday, Karim said.

"When you take into consideration the cost of transportation, VAT, customs tax, river tax and insurance costs, the BPC deficit is bound to increase," he said.

The Finance Division has allocated Tk 400 crore against the demand for Tk 5,855 crore to finance the deficit, he said.

On Feb 26, the BPC sent a letter to the Energy and Mineral Resources Ministry to inform the need for foreign currency to open letters of credit for the importation of fuel to combat the financial crisis.

The BPC has also requested the Energy Ministry to take steps to ensure a US$500 million (Tk 3,429 crore) loan through nationalised commercial banks.

The BPC letter said in the 2007-08 fiscal year the expenditure for importing refined and unrefined fuel oil and other expenses had been estimated at approximately US$4,506 million.

Last month, a letter from the energy division to the finance division said that BPC statistics showed the financial loss incurred in the first six months of the current fiscal year amounted to over Tk 1,941 crore.

In the current fiscal year, BPC will require a total of three billion American Dollar to import all its required fuel.

The procurement of fuel, especially diesel, and its distribution to farmers has become uncertain due to complexities in securing loans and the enormous financial burden.

Earlier, the chief adviser's special assistant in charge of energy M Tamim asked the finance adviser to arrange a $900 million loan to ensure the supply of fuel oil during the January-June period of the current fiscal year.