Fuel price hike

Just as Bangladesh economy is recovering from the most severe impacts of the Covid-19 pandemic common people are reeling under, what many term as an abnormal, rise in the price of essential commodities. And the authorities dropped another bombshell on common Bangladeshis by jacking up the diesel and kerosene prices to a historic high. According to report published in this newspaper on Friday experts have opined that this move is likely to have a lasting negative impact on the economy. Diesel and kerosene prices were hiked by Tk 15 on Wednesday. A day later, the retail price of 12kg LPG (Liquefied Petroleum Gas) was raised by Tk 54 to Tk 1,313. The current price of diesel and kerosene in the country is Taka 80 per litre.

The aftereffects of this decision were almost immediately evident. Without any prior notice bus fares were increased between 35 per cent and 40 per cent on different routes in the capital. Transport owners and workers began an indefinite strike on Friday to protest the move. They want the government to reverse the hike. The worst, experts believe is yet to come. This rise in fuel price, they say, will result in increased prices of every commodity. After this increase in petroleum products prices, one can expect that another strong wave of high inflation is just round the corner, as the international commodity prices have skyrocketed leading to increased price at home, including that of edible oil and other products which the country imports. Higher fuel prices would lead to increase in transportation charges as well as energy intensive industry products. Producers will be forced to pass on the increased costs to consumers. Basically, cost of living would increase across the country.

In this latest hike there has been a bucking of the general trend. The trend in pricing policies has been that diesel is almost universally taxed lesser than petrol. The argument has been that diesel is used in public and goods transport and has welfare and competitiveness implications.

The RMG sector, the biggest foreign exchange earner for the country, will also feel the pinch. With the rise in transport cost there will also be a rise in export-import cost. As many powerplants run on diesel in all likelihood there will an increase on electricity. This will have direct impact on the agriculture sector as irrigation is dependent both on electricity and diesel. In fact, public transport and agriculture sector are to be worst hit in the immediate aftermath of the rise in fuel prices. In the rural areas even now, many people are heavily dependent on kerosene. Rural poor use kerosene widely to light their homes. There are those who argue that since electricity has now reached almost all villages, the use of kerosene has gone down. However, facts on the ground points otherwise. Many families and shops that use the kerosene for cooking purposes. According to BPC Bangladesh consumes five to seven million tonnes of diesel and kerosene annually for agriculture, industry, power generation, transport and household purposes,

Be that as it may, for keen observers the hike did not come as a total surprise. The Bangladesh Petroleum Corporation (BPC) had submitted a proposal to increase fuel prices to its controlling ministry several weeks back for consideration. According to BPC it needed to adjust the prices of petroleum products upward because of the recent rise in petroleum prices in the international market.

According to reports the corporation has been incurring a loss of Tk 200 million per day from oil marketing operations. However, we have to stress that any hike should be in commensurate with the affordability of consumers. We would like to remind the authorities concerned that there have been occasions when fuel prices fell in the international market. Whenever prices fall in the world market, we are told that Bangladesh is adjusting its losses. Having said that, if the authorities had increased the prices on a gradual basis the impacts would have been less.

The Consumer Association of Bangladesh has gone to the extent of terming the fuel price hike as ‘illegal’ as the ministry bypassed the Bangladesh Energy Regulatory Commission, which is supposed to take the decision after public hearings. As stated in the report there have been widespread condemnation of the decision. While the common people are angered and frustrated, the unilateral nature of the fuel price hike decision has irked many of the stakeholders.

We urge the authorities to reconsider their decision. If there has to be an increase in fuel prices it has to be done incrementally. Bangladesh, after all is supposed to be a welfare state and a democracy. People’s interest should be given supreme priority.