Fuel oil imports to rise, economy at risk, again
bdnews24.com Senior Correspondent
The government is going to import more fuel oil this fiscal even though the economy took a hit for the import in the previous fiscal.
Abu Bakar Siddique, Chairman of the state-run oil supply company Bangladesh Petroleum Corporation (BPC), told bdnews24.com that they had imported 5.3 million metric tonnes of crude and refined fuel oil in the 2011-12 fiscal.
“The target has been set at 5.9 million metric tonnes in the current fiscal,” he said.
He said the import of fuel oil rose to cope with the increased demand in the power sector, the BPC chief said that some 17 percent of the fuel oil imported in the last fiscal was spent on power generation.
Former Finance Adviser to a caretaker government A B Mirza Azizul Islam said purchase of this huge amount of fuel oil would put massive strains on the foreign currency reserve and a drag on the economy.
But the scenario was quite different in the last two years.
The BPC imported 3.8 million metric tonnes of fuel oil in the 2009-10 fiscal, of which 5.72 percent was used by power plants. In the 2010-11 fiscal, 4.5 million metric tonnes fuel oil was imported and 8.12 percent of it was spent to produce power.
The government has already hinted at increasing furnace oil-based power generation in the next year.
The overall contribution of liquid fuels in power generation in 2011 was 11 percent, according to the ‘Strategic Development Proposal for the Power and Energy Sectors’ placed in Parliament by the Ministry of Finance.
The government has set the target of furnace oil-based power generation at 17 percent for 2012 and 21.6 percent for 2013.
To deal with the soaring demand for power, the government set up 24 furnace oil-based rental and peaking power plants soon after it took the office in January in 2009. The previous caretaker government had taken initiatives to set up 19 power plants, most of which were furnace-oil based.
But the authorities were compelled to suspend production in most of the power plants as the prices of furnace oil shot up.
The government also plans to set up 27 more power plants of the same category with a capacity of 2,545 megawatts from the beginning of this year to September 2014 to shot rolling power cuts.
Chairman of the Power Development Board (PDB) A S M Alamgir told bdnews24.com that the demand for liquid fuel oil to operate the power plants would increase in the current fiscal.
“This time our plan is to ensure maximum power generation. The demand for fuel oil will usually increase in the power plants. So, initiatives have been taken to raise electricity tariff to meet the soaring fuel oil price,” he added.
“The import of fuel oil has increased mainly to run the rental and quick rental power plants, which has a direct negative impact on the foreign currency reserve,” he said.
“The imports have increased from the last year. The import costs have also increased due to fuel oil though the import of capital machinery and industrial raw materials have come down. If the imports go further up, it will push the inflation higher as the exchange rate will put a huge pressure on foreign exchange reserve.”
The government imported goods worth $29.55 billion between July and April in the last fiscal, of which $4 billion was spent on fuel oil. Though there was a 62.62 percent growth on fuel oil and energy exports during the period, the import of capital machinery, raw materials and food items witnessed a declining growth.
Mirza Aziz said the hope for a healthy growth in export and remittance inflow which is necessary to build a forex reserve to import such a huge amount of fuel oil was very little.
Meanwhile, the government has raised the amount of subsidies in the power and energy sectors.
According to the Bangladesh Economic Survey (BES) 2012 published by the Ministry, financial losses of the loss-making state-owned enterprises was estimated at Tk 168.8 billion. The statistics show that the BPC alone counted Tk 160.71 billion in losses
Finance Minister AMA Muhith has said fuel prices will be adjusted to cut subsidy.