The Bangladesh Petroleum Corporation (BPC) has sought more than Tk18,699 crore in government subsidy after the Middle East conflict sent international oil prices soaring and pushed the state-run agency into heavy losses.

The conflict has severely disrupted oil shipments through the strategically vital Strait of Hormuz, putting further pressure on Bangladesh’s fuel sector.

International oil prices have risen sharply, but Bangladesh has kept domestic fuel prices unchanged to ease pressure on consumers. As a result, BPC has bought fuel at higher international prices and sold it at lower prices at home, incurring losses of Tk18,699 crore between March and June.

BPC has formally asked the Energy and Mineral Resources Division for urgent financial support to cover the losses and maintain uninterrupted fuel supplies.

BPC sources said the government had introduced an automatic fuel pricing formula in March 2024 to adjust domestic fuel prices in line with international market rates. Under the system, the Energy and Mineral Resources Division announces revised fuel prices at the beginning of each month.

However, the government decided against raising domestic fuel prices in line with international rates following the outbreak of war in the Middle East, citing concerns over the impact on ordinary consumers. This decision has left BPC bearing a substantial subsidy on every litre of fuel.

BPC officials said the corporation sent a letter to the secretary of the Energy and Mineral Resources Division on 23 July, detailing the severity of the crisis and its financial losses. BPC Chairman Rezanur Rahman signed the letter, which said the corporation had imported 72 fuel consignments between March and June 23.

The corporation reported losses of Tk18,699 crore during the four-month period and urged the government to allocate the amount as an emergency subsidy to help it manage the crisis.

The letter also highlighted BPC’s severe liquidity crisis. The corporation normally needs Tk15,000 crore to Tk20,000 crore in working capital to cover the cost of at least two months of fuel imports and maintain uninterrupted supplies.

However, continued losses have sharply reduced BPC’s cash reserves. The corporation warned that without immediate financial assistance, it may struggle to open letters of credit (LCs) with banks and make timely payments for fuel imports.