Bangladesh raises fuel oil prices by nearly 50pc

Bangladesh desk: The government on Friday evening revised the prices of all fuel oils at the consumer level, raising the prices of petrol, diesel, octane and kerosene by almost 50 per cent.

The prices of diesel and kerosene were raised by 42.5 per cent to Tk 114 per litre from Tk 80, while the price of petrol was raised by 51.16 per cent to Tk 130 a litre from Tk 86.

The price of octane was raised by 51.68 per cent to Tk 135 per litre from Tk 89.

A press release signed by Mir Mohammad Aslam Uddin, the deputy information officer of the ministry of power, energy and mineral resources, said that the decision would be effective from midnight past Friday.

Long queues were created at fuel stations in Dhaka as soon as the government made the decision public.

Many pumps refused to supply fuel oils to the customers, creating a chaotic situation.

Economists said that the price hike of fuel oils would put adverse effects on the lives and livelihoods of the people at a time when they were facing the pressure of inflation.

The release claimed that due to high prices in the international market, many countries had to revise energy prices.

On May 22, neighbouring India set the price of a litre of diesel at Rs 92.76 and petrol at Rs 106.03, which remains effective till now.

The press release said that it was equivalent to Tk 114.09 and Tk 130.42, respectively.

It noted that the diesel and petrol price differences between Kolkata and Bangladesh were Tk 34.09 and Tk 44.42, respectively.

Due to low prices in Bangladesh, there remains a chance of fuel oil smuggling, the ministry press release said.

It added that Bangladesh Petroleum Corporation counted Tk 8,014 crore in losses between February 22 and July 31.

‘Due to the present international oil market scenario, price adjustment has  become inevitable to keep the BPC’s import activities normal,’ read the release.

Former caretaker government adviser Mirza Azizul Islam said that transport costs would go up eventually impacting many sectors.

The prices of agricultural products will also go up, he said. Former World Bank Dhaka office lead economist Zahid Hussain said that inflation, which is already over 7 per cent, would go up further due to the hefty increase in fuel prices.

The Bangladesh Bureau of Statistics has recorded general inflation on a point-to-point basis at 7.48 per cent in July 2022 as the prices of almost all items, including main staple rice, have remained high since February.

With the latest data, the monthly inflation rate on the basis of base-year 2005-06, continues to remain high for six months in a row.

The BBS recorded the monthly inflation rate at 6.17 per cent in February 2022, a 16-month high since October 2020, when the rate was 6.44.

Zahid Hussain noted that multilateral lenders would be happy with the upward revision of fuel oil prices since it would reduce government subsidies on the items.

Economists noted that the government did not reduce the prices of fuel oils when they fell in the international market.

They also noted that the international market fuel oil prices, on average, slid to below $40 a barrel in 2016 from $96 a barrel in 2013.

But Bangladesh Petroleum Corporation, without making a commensurate downward adjustment of the fuel oils prices, only cut the prices of diesel and kerosene by only Tk 3 in April 2016, enabling it to amass a profit of Tk 43,138.17 crore since 2014–15.

The prices of diesel and kerosene were last revised on November 4, 2021, while the prices of petrol and octane were last revised on April 4, 2016.

Fuel          Previous price   New price
Diesel       Tk 80                Tk 114
Kerosene Tk 80                Tk 114
Petrol       Tk 86                Tk 130
Octane    Tk 89                Tk 135