Lowering fuel price a rational call

The ripple impact of the ongoing Ukraine conflict is already being felt across the globe with most countries bracing themselves to face a harsh winter and a prolonged period of economic hardship. Bangladesh is no exception either as soaring inflation, rise of fuel price, capricious exchange rate of the dollar plus falling RMG orders coalesce to create the setting for a tough times.

However, what is incongruous is the price of fuel which is high here but has shown a downward trend across the globe. As per a TBP report, The government increased fuel prices to a record level in August, setting the buying cost of per barrel diesel at $139. That baseline is yet to be lowered even as crude and refined oil are following a downtrend in international markets for the last one and a half months. 

The Bangladesh Petroleum Corporation (BPC), the government agency responsible for importing, distributing and marketing oil and petroleum products, is currently buying per barrel diesel at $112 to $116 from the global market, allowing it to make a profit of Tk6-9 in per litre diesel.

Although there have been calls for a reduction in price, state minister for power, energy and mineral resources, recently said that no rates will not be brought down in the near future.

This is indeed a reason for concern because a large number of factories use diesel to run generators while many power plants also use fuel.

To look at the larger picture, RMG, the main foreign exchange earning sector in the country, is set to face a hard time as developed nations facing recession have lowered the number of orders. As a result, Bangladesh RMG factories will have to seek out new markets in South America and Africa. But those markets are not waiting to be taken since there are other competitors already in place. Therefore, Bangladesh has to fight to offer the lowest rate.

Naturally, with profit margins at the minimum, any additional cost will be burden and therefore, bringing down fuel prices is essential to avoid a meltdown in the RMG sector.

During the recent almost seven hour ordeal of a country wide power outage, the nation’s business apparatus came to a standstill. The country is living with regular load sheddings – a system through which every area experiences power outage to ease the burden of demand.

This per se is detrimental to commerce and trade because buyers avoid areas without power. In addition, without power, machines used for cashless transactions don’t work.

It’s therefore fair to say that the business community is already grappling with an adverse situation.

A high rate of fuel when the nation is living with several hours of power outage every day will only hamper business.

In a practical approach, the first step should be to bring down the price of fuel and emphasise on harnessing solar energy.

This year has already seen relatively low rainfall with prolonged periods of sunny weather. While this long stretch of summer has a debilitating impact on human lives and agriculture, it also has a positive side since the sun can be the source of solar energy.

Despite a lot of talk about solar power, Bangladesh has not seen a revolution with this energy. With energy crisis comes the opportunity to take solar power usage to every home, in both rural and urban Bangladesh.

China leads the world as the top producer of solar energy, installing more than 48 GW of photovoltaic (PV) capacity in 2020. The EU, the United States, Vietnam, and Japan are ranked as top solar producers. Bangladesh can seek support from these nations, especially China since they are already engaged in several mega projects in the country.