The Bangladesh Energy Regulatory Commission (BERC) has reduced the price of furnace oil by nearly Tk16 per litre, setting the new rate at Tk70.10 from the previous Tk86, in a move expected to ease power generation costs and provide some relief to the energy sector.
The new price will come into effect from midnight on Sunday, according to a notification signed by BERC Secretary Md Nazrul Islam.
This marks the first time the regulator has directly fixed furnace oil prices, following a shift in authority from the Bangladesh Petroleum Corporation (BPC).
Previously, BPC had been setting furnace oil prices bypassing the regulator. However, after the interim government assumed office, a gazette issued on September 15 restored BERC’s authority to determine prices of furnace oil and Jet A-1 fuel.
Hearing-led price revision
The price adjustment follows a public hearing held on January 29 after BPC submitted its proposal on January 20. Several oil marketing companies—including Padma, Meghna, Jamuna and Standard Asiatic—also proposed revisions to marketing and transportation charges.
After reviewing the proposals, BERC fixed marketing charge at Tk0.71 per litre and combined transportation charge at Tk1.20 per litre.
Relief for power sector
Furnace oil is the second most-used fuel after diesel in Bangladesh, with power plants being the largest consumers. In FY2023–24, around 955,912 tonnes were sold, with over 65% imported.
Officials from the Bangladesh Power Development Board (BPDB) had earlier warned that high fuel costs were pushing the power sector into deep financial stress.
At the hearing, BPDB representatives said they were purchasing furnace oil from BPC at Tk86 per litre, while some private power producers importing fuel directly were paying around Tk57. This disparity significantly increased electricity generation costs.
They noted that fuel costs alone stood at Tk18.41 per unit of electricity, while the wholesale selling price remained much lower, resulting in mounting losses despite heavy government subsidies.
BPDB Chairman Engineer Md Rezaul Karim also pointed out that importing fuel directly was significantly cheaper than buying from BPC, urging a price adjustment in line with international markets.
Policy shift and regulatory role
BERC was established in 2003 as a quasi-judicial body with the mandate to regulate energy prices. However, its role had been limited for years, with executive orders used to set fuel prices.
A 2023 amendment had allowed the government to adjust prices directly, sidelining the regulator. The interim government later repealed that provision, restoring BERC’s authority over electricity and gas tariffs, as well as certain fuel prices.
Still, prices of diesel, kerosene, petrol and octane continue to be set through executive orders under an automatic pricing mechanism introduced in February 2023, which aligns domestic prices with international markets on a monthly basis.
Outlook
Industry insiders believe the latest price cut could help reduce electricity generation costs ahead of the summer peak season, when demand typically surges. However, concerns remain over broader structural inefficiencies and financial losses in the energy sector.
Furnace oil, a heavy residual fuel derived from crude oil refining, remains widely used in thermal power plants, large boilers and industrial facilities despite environmental concerns due to its high sulfur content.