The Asian Development Bank (ADB) on Wednesday said the net losses of the 48 non-financial state-owned enterprises (SOEs) expanded markedly to $2.1 billion in FY2012 from the previous year’s $1.2 billion. The Bangladesh Petroleum Corporation (BPC) recorded the largest loss, at $2.0 billion, reflecting increased oil imports, needed to run the numerous small rental power plants that came on line, and reflecting that BPC was not allowed to pass through higher international oil prices in full. The Bangladesh Power Development Board (BPDB) loss grew by $0.4 billion to $1.1 billion, despite several adjustments in power tariffs. The increase stemmed from higher volumes of powerpurchased at higher prices, because of increased fuel costs, from the rental power plants.

The $3.1 billion combined loss of BPC and BPDB absorbed just a little over four-fifths of government subsidy spending for the year, equaling 2.7 per cent of GDP, the ADB quarterly review said.

During the fiscal year, the government released $1.9 billion to enable BPC and BPDB to settle part of their past liabilities to banks and other creditors. Large profits of $740 million earned by the Bangladesh Telecommunications Regulatory Commission helped to narrow the enterprise sector’s overall loss, the review said.

To cut BPC losses, the government in FY2012 raised diesel, kerosene, and gasoline prices by 19.0 per cent–32.6 per cent, and furnace oil, mostly used in power generation, by 42.9 per cent. The government also raised bulk power tariffs by 52.9 per cent and retail tariffs by 27.9 per cent to reduce BPDB losses, as well as the price of compressed natural gas used by vehicles by 20 per cent.

Despite these measures, the government will need to implement further substantial price increases in FY2013 to meet the budget target for subsidy spending.  Export growth dropped to only 6.2 per cent in FY2012 from 39.2 per cent in FY2011.

Garment exports, providing over three-fourths of earnings, grew by only 6.6 per cent, from 43.4 per cent a year earlier. This downdraft in exports partly reflected the reversal of the large spike in cotton prices a year earlier, partly weak demand in the European Union (EU) and US, and partly, as export volume declined, buyers aggressively seeking lower prices. Export growth for other products also tracked dropping demand, the statement said.

Overdependence on garment exports and sales concentrated in the EU and US markets exposes Bangladesh to risks from sudden changes in demand. Garment exports to new markets have been growing, but their share is still quite small.

Imports grew by only 5.3 per cent in FY2012, slowing from 41.8 per cent a year earlier. As the garment industry depends heavily on imported inputs, lower prices for cotton and other raw materials were important contributing factors, as were easing prices for petroleum products during the fiscal year. Moreover, food grain imports declined sharply because of the earlier high build-up of stocks. Only imports of consumer goods—a small share of total imports consisting mainly of sugar, milk, edible oil, and oil seeds—grew rapidly.

Xinhua adds: The Asian Development Bank and partners will fund an infrastructure upgrading project to cushion vulnerable rural communities in Bangladesh’s over a dozen coastal districts from the worsening impacts of climate change, said the Manila-based lender Wednesday.

It said the project will finance upgrading of around 540 kilometres of roads, bridges, culverts , as well as improvements of rural markets, and will build and improve cyclone shelters and animal shelters.

Road upgrading will involve improving existing roads to climate- resilient standards and the widening and rising of embankments, with suitable slope protection against erosion and wave action, said the Bank in a statement.
It said road safety measures will be incorporated, along with road maintenance plans, and job opportunities for women.

Market improvements will include paved access roads and trading areas devoted to women traders, elevated sheds, water supply systems and drainage and sanitation facilities, with beneficiaries receiving training to operate and maintain facilities, it added.

News: The Daily Independent/Bangladesh/4th-Oct-12