Thursday, 11 August, 2022

Fuel prices hiked to reduce loss, subsidy

Says energy ministry

  • Special Correspondent
  • 7 August, 2022 12:00 AM
  • Print news

The government has hiked fuel prices to reduce energy subsidies and the huge loss being incurred by Bangladesh Petroleum Corporation (BPC).

To dispel controversy over the fuel price hike, the Ministry of Power, Energy & Mineral Resources issued a statement on Saturday justifying the move.

The government hiked the fuel prices by up to 51.7 percent with effect from Friday midnight. 

The BPC incurred a loss of Tk 80.14 billion between February and July 2022, the statement said.

“The monthly average income of BPC is Tk 55 billion against the monthly expenditure of Tk 103.12 billion. Due to capital shortfall, Tk 110 billion collected from various development projects and other sources have been spent to subsidise the energy sector since March 2022. Around Tk 200 billion should be reserved to pay for the next two months’ fuel import bills. There is no allocation for BPC in the national budget. So adjusting the fuel tariff was needed,” it said. 

The energy ministry has defended the hike in the price of diesel, petrol and octane saying it was needed to cope with the international market and reduce the loss of BPC.

State Minister for Power and Energy Nasrul Hamid said the government has no other alternative to hiking fuel prices. “The prices will be reviewed once fuel price goes down in the international market.”                 Energy Expert Prof M Tamim said public suffering will be intensified due to the tariff hike. He said the government raised the price when oil price in the international market was on a downward trend.        

The statement of the ministry of power, energy and mineral resources is as follows:

On 03/11/2021, prices of only diesel and kerosene increased through gazette notification and were fixed at Tk 80 per litre. Despite soaring prices in the international market, prices of octane and petrol remained low and unchanged in the local market.

In the international market, price of diesel was $83.35 per barrel and octane $85.25 in December 2021; $ 96.95  and 95.83 in January 2022; $108.55 and 108.04 in February, 2022;  $137.54 and 127.36 in March, 2022; $144.68 and 122.61 in April, 2022; $147.70 and 140.69 in May 2022; $170.77 and 148.44 in June and $139.43 and 114. 96 in July 2022.

The BPC’s breakeven price for diesel was $78.04 per barrel and octane $84.84 on average in the last eight months.

If the international price of diesel is $74.04 per barrel and octane $84.84, BPC will be able to sell those at Tk 80 and Tk 89 per litre. But it is impossible considering the swelling international market.

Meanwhile, the price of crude oil crossed $117 per barrel in June 2022 and the trend continues.

In July 2022, the average loss of PBC in importing diesel was Tk 74,94,92,700 and octane Tk 2,92,23,216 taking the amount of loss to Tk 77,87,15,916 per day. From February to July, BPC faced a loss of Tk 8014 crore. Despite the hike in price, BPC will continue to experience losses.

Besides, neighbouring India already adjusted fuel prices. Diesel price jumped to Rs 92.76 (Tk 114.09) and petrol to Rs 106.03 (Tk 130.42) per litre in Kolkata with effect from 22 May 2022. So Bangladesh needed to increase fuel prices to prevent the smuggling of fuel.

The energy ministry, on Friday night, announced hike in diesel price by Tk 34, petrol Tk 44 and octane Tk 46 per litre.

As per the revised rate, kerosene and diesel are selling at Tk 114 per litre, petrol at Tk 130 and octane at Tk 135 from midnight.

Quoting State Minister for Power and Energy Nasrul Hamid, the statement said “Awami League government always takes any decision considering the welfare of the common people. The government refrained from hiking fuel price as long as it could afford. Now, the government has no alternative to adjusting the fuel price. In April 2016, the fuel price came down in the local market. If normalcy is restored, such situation may recur again.”