Govt defends fuel price hike, terms it indispensable to reduce loss of BPC

The government has defended recent hike in price of diesel, petrol and octane that the same was needed in view of high international market and recurring loss of the BPC.

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

The statement 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 for both. Despite growing international market, prices of octane and petrol remained low and unchanged in the local market.

The Covid-19 receding bringing spring in economic sector early 2021-22 followed by war between Russia and Ukraine created energy crisis and triggered the fuel price to intolerable level which continues to grow.

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 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 such trend continues.

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

Besides, neighbouring India already adjusted fuel price. 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 May 22, 2022. So, Bangladesh needed to increase fuel price to prevent smuggling of the item.

The government hiked diesel price by Tk 34, petrol Tk 44 and octane Tk 46.

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

Bangladesh Petroleum Corporation (BPC) and Eastern Refinery Limited (ERL) are adjusted with the international market.

About the issue, State Minister for Power and Energy Nasrul Hamid said “Awami League government always takes any decision considering 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.”