State-owned Bangladesh Petroleum Corporation (BPC) has proposed a price increase for Jet-A1 fuel, setting it at Tk 112 per litre for local carriers. The proposed price for international flights is US$0.74 per litre.
The proposal was presented to the Bangladesh Energy Regulatory Commission (BERC) during a hearing at TCB Bhaban on Sunday. BERC Chairman Jalal Ahmed led the session, which was attended by other commission members and various stakeholders.
Despite opposition to the proposed increase in the Jet-A1 fuel tariff, ATM Selim, Senior General Manager of BPC, defended the move, stating that the tariff hike was necessary for the survival of state-owned organizations and to continue ongoing projects.
CAB Calls for Transparent Jet Fuel Pricing and Accountability
The Consumers Association of Bangladesh (CAB) has urged the Bangladesh Energy Regulatory Commission (BERC) to ensure transparency and fairness in jet fuel pricing and across all petroleum products.
CAB raised concerns about the proposed distribution and marketing charges by petroleum companies, particularly how they impact jet fuel pricing. The organization argued that these charges lacked sufficient justification and had not been properly evaluated.
CAB has called for the rejection of the current proposal, urging a reassessment of the pricing based on fair and reasonable standards. To offset potential revenue losses from jet fuel price hikes on domestic flights, CAB recommended the government adjust travel taxes accordingly.
Additionally, CAB has suggested that both domestic and international jet fuel should be exempt from taxes and duties. They are also calling for a comprehensive review of all fuel distribution and marketing charges. CAB has requested BERC to direct relevant licensees, including BPC, to provide detailed revenue data dating back to 2010. Furthermore, the organization seeks a full report on the government’s revenue from taxes, duties, and dividends collected from these licensees, as well as a statement on their stock inventory.
Frustrated with BERC’s lack of action, CAB is insisting on the commission’s intervention to protect consumer rights and ensure fair pricing in the petroleum sector. CAB has also called for public hearings on the pricing of Diesel, Kerosene, Petrol, and Octane.
BERC’s Technical Committee Recommends Lower Jet Fuel Prices
The Technical Evaluation Committee (TEC) of BERC has recommended a reduction in the price of Jet A-1 fuel in Bangladesh, based on the Platts rate for February 2025.
The report suggests lowering the price of duty-paid Jet A-1 by Tk 5.49 per litre, bringing the price down to Tk 105.51 per litre for local carriers. For bonded duty-free Jet A-1, the committee has proposed a reduction of US$0.0399 per litre, bringing the price down to US$0.6201 per litre.
The TEC report highlighted that the current Jet A-1 pricing structure includes a 2% advance tax on the tariff value. It suggests that BPC could adjust this advance tax when paying income tax at the end of the financial year, and recommended a review of the necessity of including it in the pricing structure by the National Board of Revenue (NBR).
The committee also called for a review of the long-standing ocean loss rate for Jet A-1, which appears excessively high due to the absence of lighterage. Furthermore, it suggested that depot transportation charges and tank lorry transportation costs should be evaluated by a commission formed with representatives from relevant stakeholders.
The TEC also addressed operational and financial management issues. It recommended the development of a guideline policy for managing development fund money and suggested that BPC identify invested funds and include income from these investments in the development fund.
The report advocates eliminating financing charges levied on oil marketing companies for petroleum imports, as these costs are already recovered through BPC’s charges. Similarly, it recommended abolishing the Depot Financing Service charge.
The TEC report noted that three ongoing development projects funded by BPC had not been completed or commissioned, meaning they were not factored into the determination of BPC’s rate base. However, it indicated that BPC’s storage and supply charges would change once these projects become operational.
Finally, the report addressed the commissioning of the Single Point Mooring (SPM) with Double Pipeline project, recommending that the acquisition cost of the floating jetty should be considered when adjusting BPC’s storage and supply charges during the monthly Jet A-1 price adjustments.
Local Carriers Seek Justification for Jet Fuel Tariff Reduction
The Aviation Operators Association of Bangladesh (AOAB), representing local carriers, has called for a downward adjustment of the Jet-A1 fuel tariff to ensure their survival.
Mafuzur Rahman, Managing Director of NOVOAIR, expressed concern at the hearing, highlighting the financial struggles of airlines in Bangladesh. He pointed out that while airlines are facing bankruptcy, the deposits at Padma Oil Company Limited are soaring. “Airlines will have no choice but to halt domestic flights if the situation continues,” Rahman warned, expressing his frustration.
He proposed that airlines be allowed to purchase fuel directly from refineries or the international market, bypassing the monopoly held by Padma Oil Company Limited (POCL), to reduce costs.