Losses double at Bangladesh’s state-owned enterprises

The net losses incurred by Bangladesh’s state enterprises doubled to 16,880 crore taka (US$2.06 billion) in the current fiscal year compared to the previous year, mainly due to lower selling prices of fuel and electricity than their purchase prices.

Of the 48 state enterprises, 36 made a profit of 8,386 crore taka ($1.02 billion), while 12 incurred 25,266 crore taka ($3.08 billion) losses, according to Bangladesh Economic Review 2012.

Of the loss-making enterprises, Bangladesh Petroleum Corporation and Bangladesh Power Development Board suffered 99 per cent of the total amount of losses.

The BPC incurred a loss of 16,082 crore taka ($1.96 billion) in the current fiscal year, up from 8,840 crore taka ($1.08 billion) last year. The PDB suffered a loss of 8,431 crore taka ($1.03 billion) in the current year, up from 4,587 crore taka ($559 million) a year ago.

A finance ministry official said the major cause of the losses in both the enterprises is fuel-guzzling rental power plants.

He said the BPC had to import more fuel than before to run the power plants. On the other hand, though fuel prices rose on the international market, the prices were not adjusted much domestically.

The finance ministry official said irregularities and wastage were also responsible for the losses suffered by the BPC. A few months ago, a committee was formed to scrutinise the income, expenditure and import of the state enterprise.

The PDB had to purchase electricity at higher prices from the quick rental power plants, but sold electricity at comparatively lower prices.

Even after adjusting the electricity prices several times, now the production cost is 6.80 taka a unit, while the average sales value is 4.02 taka per unit, meaning the PDB incurred a loss of 2.78 taka for a unit of electricity.

Besides, the PDB also incurs “system losses”. A PDB official said, though the system loss came down slightly over the last few years, it is still around 8 per cent.

However, the official said the main cause of the losses in the current fiscal year is purchase of electricity at higher prices from the quick rental power plants.

From fiscal 2004 to fiscal 2010, the PDB losses hovered between 121 crore taka ($14 million) and 993 crore taka ($121 million), and the loss started rising sharply from the last fiscal year.

However, a number of improvements were noticed at two enterprises — one reduced losses and the other raised profit — drastically.

Bangladesh Chemical Industries Corporation (BCIC) cut its losses by 63 per cent in the current fiscal year compared to the previous year. In the current year, the BCIC incurred a loss of 158 crore taka ($19.29 million) against last year’s 434 crore taka ($52.99 million).

Bangladesh Telecommunication Regulatory Commission increased its profit by 93 per cent to 5,849 crore taka ($713.99 million) in the current fiscal year over the last year.

Source: The Daily Star

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