Photo: Collected
Ceasefire talks between Israel and Hamas have resumed with Qatar and Egypt mediating. A ceasefire in Gaza could reduce concerns about disruptions in oil supply. As a result, the price of crude oil in the international market has decreased. However, Bangladesh unfortunately cannot reap benefits from this development because the private sector imports oil for their power plants themselves. Therefore, the government continues to purchase electricity from these plants at the previous rate.
Brent, the international benchmark for crude oil, fell 44 cents a barrel, or 1.1 percent. The price of a barrel fell to $86.66. On the other hand, the price of the US market standard West Texas Intermediate (WTI) fell by 1 to 1.2 percent per barrel. The price settled at $82.16 per barrel.
Currently, Bangladesh's private sector is generating 40 percent of the power by burning fuel oil, which is extremely expensive. The government buys power at a maximum of Tk 28 per unit from oil-based power plants.
Energy expert M Tamim commented that there is a lack of transparency in determining the price of fuel oil. He told The Daily Messenger, “It is not clear in what context the price is being determined in fixing the price of fuel oil. Why and how pricing is being determined is not transparent. According to the policy, the price of petrol should be Tk 10 higher than that of diesel and kerosene. But from the beginning, that rule was not obeyed.”
According to the policy, if the price of oil falls in the international market, it should be reduced in the country. And if it increases, it should be increased. Petrol price should always be Tk 10 higher than diesel. But that rule was not obeyed from the beginning of setting the price of fuel oil automatically.
The Bangladesh Independent Power Producers Association (BIPPA), a forum of private sector power producers, recently presented a proposal at a stakeholders' meeting at the Power Division, where it said the use of furnace oil-based plants can be increased from 40 percent to 66 percent this year.
Meanwhile, the demand for crude oil is decreasing day by day. Last year too, the pace of growth in global demand for this product was very slow. This momentum may weaken further this year. The novel coronavirus situation may return to pre-pandemic conditions. The International Energy Agency (IEA) said so. If the demand decreases, the price of this product will also decrease significantly in the global market.
As the price of fuel oil continues to fall, the producing country Saudi Arabia has taken the initiative to re-evaluate some projects. But our prices are not being reduced here.
The government on 30 June set the automated retail prices of petroleum fuel for the month of July by reducing diesel and kerosene prices by Tk1.
As per a gazette notification of the Ministry of Power, Energy and Mineral Resources, per litre diesel and kerosene will be sold at Tk 106.75 in July.
The prices of petrol and octane have been kept unchanged at Tk 127 and Tk 131 per litre, respectively, reads the notification. The new rates will come into effect on 1 July 2024.
But due to the ongoing crisis in the country, fuel oil prices will remain unchanged in the domestic market in August.
According to BPC projections, the country's demand for petroleum products will stand at 8.03 million tonnes in the fiscal year 2026-27. In contrast, the total production of ERL and ERL-2 will be 4.5 million metric tonnes. As a result, there will be a shortfall of around 3.53 million tonnes in the demand for petroleum products.
Messenger/Disha
