How do we get an efficient BPC?

The Bangladesh Petroleum Corporation (BPC) made Tk 4,316 crore in profit last year. Yet, between March and August this year, it incurred losses of around Tk 22,875 crore. This shows why BPC’s efficiency cannot be judged simply by whether it makes a profit in a particular year. The real question is whether BPC can procure fuel competitively, manage cash and inventories efficiently, maintain energy security and withstand international price shocks without repeatedly seeking emergency government support. BPC earned Tk 4,586 crore in FY2022-23, Tk 3,943 crore in FY2023-24 and Tk 4,316 crore in FY2024-25. Its recent losses were driven primarily by higher international fuel and freight costs, while domestic prices were not fully adjusted to reflect them.

A loss caused by a government decision to keep domestic fuel prices below cost is not necessarily evidence of operational inefficiency. But it becomes a management problem when losses erode working capital and threaten the corporation’s ability to finance future imports. The first priority should be to make the automatic fuel-pricing mechanism credible. Introduced in 2024, the system adjusts domestic prices periodically according to international prices, exchange rates, taxes, transport and other costs. It should work in both directions. If the government chooses to subsidise fuel, the subsidy should be transparently budgeted and reimbursed to BPC. The second priority is procurement. BPC imports millions of tonnes of petroleum products annually, making procurement decisions critical. It should benchmark term and spot purchases, freight, insurance, premiums and payment terms against international alternatives. Transparent tendering, stronger contract management and independent benchmarking could reduce costs and strengthen confidence. BPC also needs better risk management. Petroleum prices and freight rates can change rapidly, while fuel imports create substantial foreign exchange and letter of credit exposure. A formal framework should cover price, currency, liquidity and supply risks.

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Inventory management presents another challenge. Strategic stocks are essential for an import-dependent country, but maintaining them ties up working capital. Bangladesh currently has roughly 60 days of strategic fuel storage and plans to raise this to 90 days. The goal should be not simply more storage, but the right mix of products, locations and inventory levels based on consumption, supply risks and financing costs.

Efficiency must extend beyond imports. BPC’s storage terminals, pipelines, depots and distribution companies should be measured against benchmarks for handling losses, inventory turnover, operating costs and service reliability. The refining and infrastructure strategy also deserves attention. Eastern Refinery’s capacity, utilisation and crude procurement, alongside facilities such as the Single Point Mooring system, should be evaluated as one integrated supply chain. Infrastructure should reduce costs and supply risks, not simply increase capacity. Financial discipline is equally important. BPC reportedly had only about Tk 12,368 crore in usable working capital in September and estimated that another Tk 15,000-Tk 20,000 crore would be needed to maintain adequate import support. It has also drawn around Tk 19,500 crore from funds earmarked for development projects.

BPC should build reserves from profitable years while ring-fencing development funds. These reserves should absorb temporary price shocks without disrupting imports. Finally, governance must improve. Commercial decisions should be separated from policy decisions and properly accounted for. BPC and its subsidiaries should publish quarterly indicators covering procurement savings, inventory losses, financing costs, working capital adequacy, storage utilisation and service reliability. These should be independently audited.

An efficient BPC does not have to maximise profits. Its role is to secure fuel for the economy at the lowest sustainable cost while remaining financially sound. The real test is whether BPC can navigate price cycles without turning temporary shocks or policy decisions into recurring fiscal burdens. It should be prepared financially, commercially and operationally before the next crisis arrives.

The writer is an economic analyst and lead partner at Financial Excellence Ltd