Bangladesh Petroleum Corporation (BPC) has reallocated around Tk195 billion from various project funds, including the Eastern Refinery Unit-2 project, to sustain fuel imports amid supply disruptions caused by the conflict in West Asia.

The disclosure came in a working paper prepared by BPC for the first meeting of the Parliamentary Standing Committee on Public Undertakings on Tuesday.

The paper said BPC incurred losses of around Tk228.76 billion between March and August while maintaining uninterrupted domestic fuel supplies.

BPC Chairman Rafiqul Islam, however, said the reallocation would not affect project implementation as the funds belonged to BPC and were shifted after assessing when and how much each project would require.

“We reallocated the money after considering when and how much each project would need in the current and next fiscal years. No fresh funds were sought from the ministry for this,” he said.

He said ensuring fuel imports remained BPC’s top priority amid the ongoing crisis and funds would be arranged for projects whenever required.

The BPC paper said the corporation needs Tk150 billion to Tk200 billion in working capital, equivalent to around two months’ fuel costs, to ensure energy security. Its working capital has declined as fuel is sold at subsidised prices.

Diesel accounted for a major portion of the losses, as it represents around 65% of petroleum products consumed in the country, Rafiqul said.

According to the paper, diesel cost around Tk205 per litre based on international prices and the prevailing dollar exchange rate when it was prepared, while it was sold domestically at Tk115.

The average international diesel price rose from $86 per barrel in February to $186.59 in March and peaked at $284.95 in April. It stood at an average of $165.82 in September.

The paper said BPC would need an international diesel price of around $110 per barrel to recover costs at the latest domestic retail price.

Bangladesh introduced an automatic fuel pricing mechanism in March 2024, under which prices are adjusted monthly based on international markets. However, the government kept domestic prices largely unchanged for around five months after international prices surged from March, citing public interest.

Diesel was raised from Tk100 to Tk115 per litre on 19 April. On 1 June, kerosene was set at Tk135, octane Tk145 and petrol Tk140, while diesel remained at Tk115.

On 21 September, prices of all four products were raised by Tk20 per litre, taking diesel to Tk135, kerosene to Tk155, octane to Tk165 and petrol to Tk160.

BPC said the latest increase was aimed at reducing losses and the risk of fuel smuggling to neighbouring countries.

The parliamentary committee recommended that BPC submit detailed information at its next meeting on fuel demand, storage capacity and preparations to meet future demand, as well as a realistic plan to keep prices affordable.

BPC and its subsidiaries currently have storage capacity for 1,600,273 tonnes of fuel at 64 depots and installations, providing 40-45 days of security depending on the product.

The corporation plans to raise the storage capacity to 90 days. Rafiqul said subsidiary companies had begun expanding storage facilities using their own budgets, while the total investment requirement would be determined after reviewing their plans.