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 Tk86, in a move to lower power generation costs and provide relief to the energy sector.
The revised price will take effect from midnight Sunday, according to a notification signed by BERC Secretary Md Nazrul Islam.
The decision marks the first time BERC has directly fixed furnace oil prices after regulatory authority was shifted back from the Bangladesh Petroleum Corporation (BPC).
Previously, BPC had been setting furnace oil prices through executive orders, 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.
The latest adjustment followed a public hearing on January 29 after BPC submitted its proposal on January 20. Oil marketing companies — Padma, Meghna, Jamuna and Standard Asiatic — also sought revisions to marketing and transportation charges.
After reviewing the proposals, BERC fixed the marketing charge at Tk0.71 per litre and the 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, more than 65% of which was imported.
Officials from the Bangladesh Power Development Board (BPDB) had earlier warned that high fuel costs were pushing the power sector into financial strain.
At the public 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 about Tk57 per litre. The price disparity significantly increased electricity generation costs.
They noted that fuel costs alone stood at Tk18.41 per unit of electricity, while the wholesale tariff remained much lower, leading to mounting losses despite substantial government subsidies.
BPDB Chairman Engineer Md Rezaul Karim said direct fuel imports were considerably cheaper than purchases from BPC and urged price adjustments in line with international market trends.
Policy shift and ongoing pricing mechanism
BERC, established in 2003 as a quasi-judicial body to regulate energy prices, had seen its role curtailed in recent years as executive orders were 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.
However, 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 say the latest price cut could help reduce electricity generation costs ahead of the summer peak season, when demand typically rises.
However, concerns persist over structural inefficiencies and sustained financial losses in the power sector.
Furnace oil, a heavy residual fuel derived from crude oil refining, remains widely used in thermal power plants and industrial facilities, despite environmental concerns due to its high sulfur content.