Bangladeshi corporations struggle to reduce the net loss

The loss acquired, due to the  higher purchasing rate and lower selling rate in fuel and electricity sector of our country, has caused the net losses of Bangladesh to be doubled by the state enterprises to 16.880 crore Tk  in the current financial year. Out of the 48 loss making enterprises, 36 made a profit of Tk 8,386 crore; Bangladesh Petroleum Corporation and Bangladesh Power Development Board alone suffered 99 percent of the total loss which is estimated by the Bangladesh Economic Review, to be about Tk 25,266 crore.

 In both the cases of BPC and PDB; losses doubled from approximately 9 crore Tk to 16 crore Tk and 4.5 crore Tk to 8.5 crore Tk respectively in just one year. An official from the finance ministry stated that the major cause of the losses in both the enterprises is fuel-guzzling rental power plants. He specified that the losses occurred mostly because BPC’s power plants requires more fuel to run therefore resulting into BPC importing more fuel than before. And also because the international rise of fuel price was not adjusted much domestically. The official also stated that the consumption and irregularities were also accountable for the losses that BPC suffered. A committee was formed to analyze the income, expenditure and import of the state enterprise.

Likewise PDB also had to purchase electricity at higher prices from the quick rental power plants and sold the electricity at comparatively lower prices. Even after the adjustment of electricity prices quite a few times, now the production cost is Tk 6.80 per unit, where the average sales value is Tk 4.02 per unit; causing PDB to suffer a loss of Tk 2.78 per unit of electricity this year.

What is more demoralizing is the fact that PDB also incurs "system losses". Even though the system loss has reduced through the years, it is still at an unviable percentile of 8 %, stated a PDB official.  The official also noted that the main cause of the losses in the current financial year is purchase of electricity at higher prices from the quick rental power plants. From 2004 to 2010, PDB’s losses lingered between Tk 121 crore and Tk 993 crore; the rate however started rising sharply only from the last financial year.

Both the companies have developed ways to reduce this loss. One reduced losses and the other raised profit - significantly. There have been also other attempts from other companies to reduce the net loss of Bangladesh. For instance, Bangladesh Chemical Industries Corporation reduced its loss by a percentile of 63 percent in the past one year. BCIC reduced its loss from434 crore to 158 crore Tk in the past one year. And Bangladesh Telecommunication Regulatory Commission (BTRC) increased its profit by 93 percent to Tk 5,849 crore in the current financial year in comparison to the last.

Main news link: Losses double at state enterprises