Bangladesh Petroleum Corporation was established by Ordinance No. LXXXVIII of 1976. It began to function from 01.01.1977 with four Oil marketing companies, two blending plants and a refinery as its subsidiaries. The position of the corporation in relation to these companies is similar to that of a holding company. Subsequently, two oil marketing companies, namely Padma and Meghna were merged into one company.
The need for having a statutory corporation for marketing and distribution of petroleum products was felt by the government with a view to streamlining the import of crude and refined products and ensuring product availability in the country at all times. In fact the need for a public statutory body to exercise financial and administrative control over the oil companies and the refinery regardless of the fact whether the Government had minority or majority shares was realized as early as in 1974. The first step in that direction was assumption of administrative control of the oil marketing companies and the refinery by Petrobangla. Since management of gas and oil operation by a single body was becoming more difficult, the Government subsequently decided to create a separate corporation for importation, processing and marketing of oil.
Prior to the establishment of BPC the marketing companies function was mainly import of refined products as well as their distribution and the refinery's function was procurement of crude oil and processing it. This continued till begining of 1977 with erractic and unorganized procurement of products. BPC, therefore, took over product procurement and later that of crude as well forms ERL and oil companies respectively leaving marketing with the oil companies, of course under close supervision of BPC. BPC's Close monitoring and supervision have resulted in substantial reduction in the discharging operation of refined products, transit and operational losses of the oil companies, process loss of the refinery etc over the years.
Oil procurement, due to phenomenal increases in price over the past few years, is a highly costly affair today. For example, in Bangladesh it costs over 60% of the country's export earnings. It is therefore beyond the financial and administrative capability of either the refinery or the oil companies to handle this operation, particularly since international financial and commercial commitments today require counter-guarantee of the Government in the ministry of finance and Bangladesh Bank.