Bangladesh Petroleum Corporation Uses Tk 195 Billion From Project Funds To Sustain Oil Imports Amid West Asia Crisis

⚠ Bangladesh Petroleum Corporation (BPC) has drawn down Tk 195 billion from project allocations, including funds earmarked for the Eastern Refinery Unit-2 expansion, to sustain fuel imports amid supply disruptions arising from the conflict in West Asia. The disclosure came in a working paper prepared by BPC for the first meeting of parliament''s public undertakings committee on 30 September 2026, and highlights the severe financial strain that the state oil monopoly has been under since international oil prices spiked in March 2026.

📊 According to the working paper, BPC incurred losses of around Tk 228.76 billion between March and August 2026 while keeping domestic fuel supplies uninterrupted. The corporation had tapped project funds to maintain imports over the past seven months, raising questions over whether the projects whose funds were tapped will see their work affected. BPC Chairman Rafiqul Islam, however, defended the move, saying the money remains the corporation''s own and has simply been reallocated based on priority.

🏛 BPC chairman defends reallocation

"The funds held in project accounts belong to BPC itself," Rafiqul Islam told bdnews24.com. "We reallocated the money after considering when and how much each project would need in the current and next fiscal years. Describing continued fuel oil imports despite the losses as BPC''s top priority at present, he said funds would be arranged for the projects whenever needed — though the reassurance has not fully addressed concerns about potential delays to critical energy infrastructure projects including the Eastern Refinery Unit-2 expansion.

The working paper says BPC needs to maintain Tk 150 billion to Tk 200 billion in working capital, equivalent to the cost of two months'' fuel, to ensure energy security. This is a substantial sum that reflects the scale of Bangladesh''s fuel import dependence and the financial strain of maintaining supplies during periods of elevated international prices.

💰 Losses driven by diesel price gap

According to BPC, the corporation''s losses stood at about Tk 228.76 billion between March and August 2026. BPC Chairman Rafiqul said diesel accounted for a large share of the loss, as it makes up about 65 percent of petroleum products used in Bangladesh. Based on international prices and the dollar exchange rate when the working paper was prepared, diesel cost about Tk 205 per litre, while it was being sold domestically for Tk 115 — a gap of Tk 90 per litre that BPC had to absorb.

The working paper shows the trajectory of international diesel prices:

• 📊 February 2026: Average international price of diesel was $86 per barrel
• 📊 March 2026: Price rose sharply to $186.59 per barrel as West Asia conflict began
• 📊 April 2026: Price peaked at $284.95 per barrel — more than three times February''s level
• 📊 September 2026: Average price had eased to $165.82 per barrel when working paper was prepared

For BPC to recover its costs at the latest adjusted retail price, the international price would have to be $110 per barrel. The corporation is therefore still incurring losses at the current price of around $165.82 — a gap that explains the urgency of the Tk 195 billion reallocation from project funds.

👥 Domestic fuel price adjustments

Bangladesh introduced an automatic fuel pricing mechanism in March 2024, adjusting diesel, kerosene, octane and petrol prices monthly in line with the international market. The BPC paper said that although international fuel prices rose sharply from March 2026 because of the West Asia war, the government held off raising domestic prices under the automatic formula for around five months, citing public interest.

Kerosene was then set at Tk 135, octane at Tk 145 and petrol at Tk 140 on 1 June 2026, with diesel kept at Tk 115. Most recently, on 21 September 2026, all four fuel types saw a Tk 20 per litre increase, taking diesel to Tk 135, kerosene to Tk 155, octane to Tk 165 and petrol at Tk 160. BPC''s paper said the latest price hike was aimed at both cutting losses and reducing the risk of fuel being smuggled to neighbouring countries.

Asked whether BPC had specific data on the scale of smuggling, Rafiqul Islam said the corporation had not been able to pin down an exact figure. He said the price gap between the two countries had created a smuggling risk, with reports reaching BPC from different sources, and that this risk had also factored into the price adjustment.

🏛 Parliamentary committee scrutiny

The Parliament Secretariat said Tuesday''s meeting discussed the reasons for the fuel crisis after the current government took office. The committee sought an explanation from BPC about how the crisis ended after fuel prices were raised even though the supply system remained unchanged during and after the crisis — a pointed question that highlights the political sensitivity of fuel price increases in Bangladesh.

The BPC chairman, however, said the first meeting of the committee did not include a detailed discussion of fuel price increases. Instead, the discussions focused mainly on the operations of BPC and its companies, their preparations and future plans. The committee recommended that BPC provide detailed information at its next meeting on current fuel demand, storage capacity and preparations to meet future demand. It also recommended that the corporation prepare a realistic plan to keep fuel prices affordable for consumers.

🌏 Storage capacity and energy security

BPC and its subsidiary companies have the capacity to store 1,600,273 tonnes of fuel oil across 64 depots and installations. According to BPC''s figures, this capacity can provide 40 to 45 days of fuel security, depending on the product. The paper also outlined plans to raise this storage capacity to 90 days — a significant expansion that would give Bangladesh much greater insulation from supply disruptions like the one currently caused by the West Asia crisis.

Asked how much investment this would require, Rafiqul Islam said: "The total investment figure hasn''t been determined yet. BPC won''t build all the infrastructure centrally. The subsidiary companies have begun work to boost storage capacity using their own budgets. Once we review all the companies'' plans, we''ll determine how much funding will be needed." The BPC chairman said this information would also be shared with the parliamentary committee at a later stage.

💰 Strategic context for Bangladesh''s energy security

The Tk 195 billion reallocation from project funds is a stark illustration of the financial strain that Bangladesh''s energy sector has been under since the West Asia conflict began. With international oil prices spiking to $284.95 per barrel in April 2026 — more than three times the pre-crisis level — BPC was forced to absorb massive losses to maintain domestic fuel supplies. The reallocation from project funds was a pragmatic short-term solution, but it raises serious questions about the long-term sustainability of Bangladesh''s fuel pricing and energy security framework.

The planned expansion of storage capacity to 90 days is a positive longer-term signal. Bangladesh currently has only 40-45 days of fuel security, which is well below the 90-day standard maintained by many other major oil-importing countries. Increasing storage capacity would give the country greater insulation from supply disruptions, reduce the need to absorb massive losses during price spikes, and provide more time to negotiate alternative supply arrangements when crises emerge.

However, the storage expansion plans remain at an early stage, with BPC still determining the total investment figure required. In the meantime, the corporation will continue to face financial pressure from the gap between international and domestic fuel prices — a gap that the September 21 price adjustment has narrowed but not eliminated. The coming months will be critical for BPC and Bangladesh''s energy security, as the West Asia conflict shows no signs of resolution and international oil prices remain elevated.

For Bangladesh''s broader economy, the BPC situation underscores the strategic vulnerability of the country''s heavy dependence on imported fuel. While domestic gas production and renewable energy investments can help reduce this dependence over time, the immediate lesson is that Bangladesh needs to build a more resilient energy security framework — one that includes greater storage capacity, more diversified supply sources, and a more responsive domestic pricing mechanism that can adjust to international price shocks without creating massive financial losses for the state oil monopoly.