The government is once again attempting to raise fuel prices. Even amid the upward trend of commodity prices and inflation, a government order has been issued to automatically increase diesel prices through self-regulating pricing mechanisms. Economists suggest that if the prices of diesel or fuel rise now, their impact will extend to other sectors as well. This will result in an increased economic burden on the common people. They view this government decision as reckless.
On Thursday (February 29) night, the Ministry of Power, Energy and Mineral Resources issued a government order on the automatic price determination notification to increase the price of fuel, especially diesel, considering the local and international markets. However, there is no mention in this notification about coordinating with the international market for fuel, or increasing or decreasing charges for agricultural products and their transportation.
Economists say that if the price of fuel oil and electricity increases during the period of upward inflation, the people and businessmen will be under severe financial pressure. The private sector of the country will face a major financial crisis. They also feel that the International Monetary Fund (IMF) loan conditions should not impose financial burden on the people.
The Ministry's notification states that the self-regulating pricing method will be applicable to the sale prices of petroleum products such as diesel, kerosene, octane, and petrol for which the government determines the selling prices. However, if Bangladesh Petroleum Corporation (BPC) considers it necessary, it can also apply this directive to other petroleum products. The self-regulating pricing method will be effective from March of the current fiscal year, initially on a monthly basis.
Regarding this, Nasrul Hamid Bipu, the State Minister for Power, Energy, and Mineral Resources, said that if the price of oil increases globally, it will also increase in our country. If it decreases worldwide, it will decrease here too. This will be done in the first week of each month. Our neighbouring countries do it every day. If we talk about Kolkata, the price of one litre of diesel is 133 taka there. In our country, the price of diesel is 109 taka.
The increase in the price of cooking oil is further explained in the notification. In the method of determining the self-regulating sales price of diesel and kerosene imported during the period of upward inflation, the cost components of the paid diesel in Eastern Refinery after considering the cost components of the diesel produced from crude oil will be included. The self-regulating sales price of diesel will be determined by considering factors such as the self-regulating sales price, product price, import duty, advance income tax, and VAT at the import stage, operational, economic, administrative, and monitoring expenses, BPC's margin, VAT, sales, and distribution costs.
In the case of octane and petrol, the self-regulating sales price of the imported paid octane will be determined by considering the cost components of the octane produced from crude oil in Eastern Refinery. The self-regulating sales price of octane will be determined by considering factors such as self-regulating sales price, product price, import duty, advance income tax, and VAT at the import stage, operational, economic, administrative, and monitoring expenses, BPC's margin, VAT, sales, and distribution costs. The self-regulating sales price of imported paid petrol will be determined by considering the cost components of the petrol produced from crude oil in Eastern Refinery. The self-regulating sales price of petrol will be determined by considering factors such as self-regulating sales price, product price, import duty, advance income tax, and VAT at the import stage, operational, economic, administrative, and monitoring expenses, BPC's margin, VAT, sales, and distribution costs.
Octane and petrol are used more in personal vehicles in the country than diesel. Therefore, the pricing of these two items is kept higher than diesel in terms of litre per litre. According to the formula, if the cost of petrol is increased during the price determination period, the factor will be considered in the pricing formula to keep a minimum of 10 taka difference per litre compared to diesel.
Earlier, on August 29, 2022, the prices of diesel, petrol, and octane were reduced by 5 taka per litre.
Meanwhile, inflation is on the upswing again at the beginning of this year. In January, the first month of the year, overall price inflation in the country rose to 9.86 percent. This is the highest inflation since last October. Overall inflation in the country was 9.93 percent in October. After that, inflation decreased for two consecutive months in November and December. Bangladesh Bureau of Statistics (BBS) released the latest inflation data on February 16. It shows that inflation has increased in both urban and rural areas.
According to BBS data, inflationary pressure was higher in cities than in villages in January this year. While overall inflation was 9.70 percent in rural areas, it was 9.99 percent in urban areas. In other words, inflation in urban areas has now reached close to double digits.
Consumers Association of Bangladesh (CAB) energy advisor Professor M Shamsul Alam told Bangla Outlook that increasing the price of fuel and electricity by bypassing the public hearing and the Bangladesh Energy Regulatory Commission will cause a big blow to the investment development of the private sector. Thus, if the price of energy in the country increases, the cost of production will increase and the price of the product will go beyond the reach of the people.
He said that the plunder of this government has brought down the private sector business. An opportunity has been left to increase the cost on individuals in determining the price of energy products by making an executive order without holding a public hearing. As a result, all the powers and rights of the people to determine any kind of fair and reasonable price of these products have been undermined. The state is depriving its people of the minimum rights. And consumers are getting ripped off financially. To continue the looting of the state, the EQuick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 has been enacted. When the price of fuel goes up, bus fares and public transport go up as well. But the transport fare in Bangladesh does not decrease in any way after prices go down.
He also said that political, social, and other interest group organisations should come forward to prevent this continuous financial burden and looting of the country's consumers. If the people and these organisations cannot do anything, then the people will only plead with Allah for this government. Allah will take appropriate measures at some point.
Former financial advisor and eminent economist. ABM Md. Azizul Islam told Bangla Outlook that the increase in the price of fuel and electricity will increase the economic burden on the common people. Thus increasing the price will increase the cost of production. If inflation increases, people will be in financial trouble. However, if there is high inflation in the market, the price of energy products should not be increased in any way.
He said that the price of energy products will be determined according to the executive order. Another way to keep fuel prices stable is by reducing the level of subsidies. In this way adequate care should be taken so that there is no negative economic impact on the common people.