Fuel price adjustment a logical demand

The war in Ukraine is having a ripple impact with high inflation, supply chain disruptions, sudden rise of the dollar against local currency and through price hike of fuel.

While most agree that the war has had a deleterious impact on the global economic apparatus, the price hike of fuel is incongruous with the situation in the global market where the rates have fallen.

As per a report published in this newspaper yesterday, If the BPC does not adjust the price, the state-owned company will make a profit of Tk. 450 crore per month, taking into consideration the base price of October 03 international market prices.

Besides, BPC is also making a huge profit by selling kerosene, petrol and octane mainly produced in domestic gas fields as condensate.

Taking into consideration the precarious condition of the economy, the common demand is for the price to be re-adjusted to allow people to buy it at reasonable rates.

The Bangladesh Garment Manufacturers’ and Exporters’ Association, BGMEA, is reported to have written a letter to the PM asking for a reduction in the price of diesel – a necessity for running generators supporting large factories.

As it is, there is a fear that as recession looms, buyers in developed nations will tighten belts, as a result of which, work orders for Bangladesh will see a significant decline.

In such a condition, the garment industry can only remain competitive if they seek out new markets and offer to supply finished items on time.

Naturally, if diesel prices soar, profit for factory owners will take a hit, consequently impacting the timely wage payment of garment workers.

Experts have bemoaned that while price adjustment is a regular feature in most nations, Bangladesh is not following it.

Also, there has been a call to buy Russian fuel which helps the price to come down by around 15 percent.

On average, Bangladesh’s monthly diesel consumption is above 5 lakh tonnes and the country is importing refined diesel of its three-fourth demand. BPC bought per barrel (160 litre) refined diesel at $112 on October 03.

On September 27, per barrel refined diesel’s price was $116 and taking into consideration the base price of the day, per litre diesel’s cost was Tk102 including premium, tax and distributing charge.

But currently per litre diesel is selling at Tk109.

However, when the government increased diesel price by 42.5 percent to Tk114 from Tk80 on August 05, per barrel refined diesel price was $139.

Reuters report claimed that crude oil price had been dwindling since the end of August and the price was nine-month lowest on 24 September at $82.

As per the Export Promotion Bureau (EPB), the country’s export earnings declined by 6.25 percent to $3.9 billion in September year-on-year basis.

Expatriates sent $1.53 billion this September, a seven-month low and a 10.84 percent decline from $1.72 billion recorded during the same month last year, the Bangladesh Bank data shows.

Rising inflation, recession in developed nations, a protracted war polarising major super powers, falling RMG orders do not paint a very encouraging picture.

Although Bangladesh is not in recession yet, the coming months will become tough because export earnings have taken a hit.

With so many adverse conditions, the government can add some relief if it brings down the price of fuel, which will facilitate internal commerce and provide a much needed impetus to the struggling RMG industry.

Concurrently, there has to be a move to popularise solar based energy to meet domestic energy needs.

There is no denying that the world is moving into rough waters and to come out with minimum damage, a far sighted policy supported by business friendly strategy is crucial.