Airlines in Bangladesh will not benefit from an initiative of the Bangladesh Petroleum Corporation (BPC) to start adjusting the price of jet fuel on a monthly basis using a new formula, according to industry people.

As per the new formula, the price of jet fuel will be calculated each month by adding the average rate quoted by the Platts Asia Pacific/Arab Gulf (APAG) Marketscan for the preceding month with other expenses.

These include the average premium cost, lighterage and financing charges. However, no value-added tax or other duties will be imposed when selling jet fuel for international flights.

On the other hand, the price of jet fuel for domestic flights will be subject to the same formula with the addition of VAT and other duties.

The Ministry of Power, Energy and Mineral Resources issued a notification on April 8, announcing the new formula for setting jet fuel prices for both international and domestic flights.

The notification said the BPC will set the price of jet fuel using the new formula by the first week of each month.

Mofizur Rahman, managing director of Novoair, said the move will be of no benefit to them as the market situation will remain the same.

“We wanted the price to be adjusted in line with its rate in the international market. But the BPC has added various costs with the international price, so the result will be the same as before.”

Rahman also informed they had urged the government to allow an organisation other than Padma Oil Company to start selling jet fuel and thereby make the market more competitive.

At present, Padma Oil, a concern of BPC, is the lone distributor of jet fuel in the country.

“If we are bound to buy from one single source, there will be no benefit in the new system of setting the price,” he said. “We will not be rid of the price burden under the new system.”

Habibur Rahman, chief financial officer of US-Bangla Airlines, said it would have been fine if the BPC adjusted the price of jet fuel based solely on the APAG average.

“But they will add some costs to it, which includes transportation, financing and administrative costs, due to which airlines will not be benefited much.”

He also said the airlines would have benefited more if they could buy jet fuel at a competitive price from an alternative source other than Padma Oil.

Kamrul Islam, general manager of public relations at US-Bangla Airlines, said they have long been demanding the government to set jet fuel prices in line with the international market.

Amin Ul Ahsan, chairman of BPC, said the government has formulated the new formula following discussions with various stakeholders to ensure that airlines do indeed benefit from it.

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