Monday, 4 July, 2022

Govt plans to adjust fuel tariff every six months

The government is likely to adjust the petroleum fuel tariff every six months due to skyrocketing fuel prices in the international market amid the Russia-Ukraine war, State Minister for Power and Energy Nasrul Hamid told the Daily Sun.

“We have no other alternative but to adjust the fuel tariff every six months as we are facing Tk 54.29 loss on diesel sale and Tk 34 loss on octane sale per litre,” Nasrul Hamid said.      

He said India has already adjusted fuel tariffs due to a hike in the international rates.

The finance division secretary also raised the issue of fuel tariff adjustment on Monday while energy and mineral resources division secretary Md Mahbubur Rahman and BPC chairman ABM Azad met with him about the procurement of ITFC loan for meeting the growing demand for fuel import.

“We have incurred a loss of Tk 1005 million per day for selling diesel Tk 54 lower than its import cost per litre,” according to a BPC official.

He said the government faces an additional Tk 40 million in losses for selling octane at a lower price.

The BPC has already suffered a loss of Tk 965.81 million on diesel and another 40 million on octane, according to the official.

The country is now consuming 17,790,000 litre of diesel per day. Each barrel of diesel costs $172.50 now. 

According to him, the BPC’s bank deposit come down to Tk 200 billion due to the loss the state agency is incurring for selling fuel at a lower price.

“We required at least Tk 300 billion but the fuel cost has eaten up all the deposit and we have only remaining Tk 200 billion,” he said.

The finance division has recently allocated Tk 10 billion and asked us to mobilize funds from international sources, sources said.

Talking about the issue, BPC chairman ABM Azad told the Daily Sun that they have already faced a loss of around Tk 80 billion  per month since the start of the Russian war.

The government is planning to procure a $1400 million ITFC loan from Jeddha with 1.8 percent of markaba, 0.2 percent administrative cost and the rate of Secured Overnight Financing Rate (SOFR).

“We might need to pay around 3.15 percent interest on the $1400 million loan,” he said. The interest rate was only 2.8 percent for $1100 million loan year.

About adjustment of the fuel prices, Professor Prof M Tamim, dean of engineering of BUET said the government should keep the present tariff structure considering inflation rate.

“If the government will adjust the tariff right now then the inflation will be increased and country’s economy will also face in trouble,” he opined.

So, the government may adjust the fuel prices with international market rate when the market in down trend, he suggested.