DHAKA, June 14: Bangladesh, which depends fully on imports to meet its oil needs, faces up to $2.5 billion in losses in the year to June 2009 unless it raises prices to match international market rates, a government official said on Saturday.

“It will be a heavy burden for this poor nation to bear such a big amount of losses in next fiscal year,” said M. Tamim, special assistant to the chief of Bangladesh’s interim government, responsible for power, energy and mineral resources.

“Not only oil, but the prices of natural gas and electricity also need to be adjusted (with international prices). Otherwise the country will be in a deep crisis,” he told reporters.

The state-run Bangladesh Petroleum Corporation (BPC), the lone oil importer and distributor in the country, would require nearly $1.5 billion in subsidy to cover the losses during the 2007-08 current fiscal year, ending on June 30.

Last month the BPC proposed to the country’s military-backed interim authority to raise fuel price between 37 and 80 per cent.

The government increased fuel prices by about 21 percent in April 2007 when crude oil was trading at $67, Tamim said. The oil price in the global markets has since nearly doubled.

The interim government, headed by former central bank governor Fakhruddin Ahmed and which is due to end its tenure following election planned for next December, is holding back on another sharp increase, apparently fearing a public backlash.

Bangladeshis, half of whom still live below the poverty line, have faced hardship due to rocketing food and commodity prices over the past year.

Bangladesh imports 3.8 million tonnes of fuel every year, of which almost 80 per cent is diesel, officials said.

In the 2007/2008 fiscal year, Bangladesh needs $4.5 billion for oil imports and repayments of BPC’s loans, compared with $3.2 billion in the previous year.

“It is only a matter of time when we raise the oil prices, which we also know will have multi-dimensional effects on the economy,” Tamim said.

The Bangladesh oil, gas and mineral corporation or Petrobangla said it could not pay for natural gas it bought from the international oil companies (IOCs).

Petrobangla is the sole buyer of gas from the IOCs operating in Bangladesh.

“We are always very particular to pay their bills. But for the first time we could not pay them last month and also will not be able to pay (bills) for the current month,” said Jalal Ahmed, chairman of the government-run Petrobangla.

As Petrobangla sold gas to local consumers at a very low price, it suffered nearly $12 million losses each month, he told reporters on Saturday.

The IOCs supply nearly 50 per cent of total demand of 1,800 million cubic feet of gas per day (mmcfd) to Petrobangla.

“We have to pay up to $3.5 per unit (mcft) which we sell with 150 per cent losses at only $1.4 per unit,” Jalal said.

International oil companies Chevron of the United States, Cairn Energy of Britain, Tullow of Ireland and Canada’s Niko Resources are actively engaged in exploring, discovering and in producing natural gas in Bangladesh.—Reuters