Home ›› 11 Aug 2022 ›› Front
Bangladesh has found itself at the worst state ever in the country’s economic history, and this is why the government has been using the Bangladesh Petroleum Corporation (BPC) as a major source of revenue, experts said at an event.
The unprecedented price hike of fuel oil will severely impact public lives, agriculture, businesses and industries, and the government could have prevented this outcome by lifting tax, VAT and import duties on this specific commodity, they added.
Participating in a discussion titled “Record Fuel Price Hike in Bangladesh: Could It Be Avoided” organised by the Centre for Policy Dialogue (CPD) in Dhaka on Wednesday, experts blamed the corruption, mismanagement and inefficiency at BPC for the ongoing crisis.
Advising the government to boost the state-run agency’s efficiency, speakers demanded an immediate reduction in fuel oil prices, pointing out that the rise in rates will severely disrupt the food and industrial production in Bangladesh.
Low income, but higher fuel price
According to the CPD, the price of per litre octane in Bangladesh is Tk 10 higher compared to the prices in neighboring India, while the price of diesel is also higher by Tk 2.
The price of octane is higher by Tk 29 and diesel by Tk 16 here compared to Vietnam – which is Bangladesh’s biggest competitor in the global RMG market.
Among the neighboring countries, only Nepal and Sri Lanka have higher octane prices, and only Nepal and Bhutan have higher diesel prices, claims CPD. Calculated in Taka, the price of per litre diesel is Tk 260 in Hong Kong, Tk 187 in Germany, Tk 128 in USA and Tk 191 in Singapore.
At the programme, energy expert Prof Ijaz Hossain said, “Countries where diesel prices are high, their per capita income is several times higher than Bangladesh, so the people of those countries do not have to suffer much pressure.
“But Bangladesh is already facing high inflation due to the Covid-19 pandemic and Russia-Ukraine war.”
“If India can adjust fuel prices in tandem with the global market, why can’t Bangladesh do it? The government could have avoided the unprecedented hike in fuel prices by reducing BPC’s tax and VAT.”
CPD’s Executive Director Fahmida Khatun said, “The government should roll back the hike in fuel prices, as the impact of this move will have multiple impacts on the economy. The fuel price hike will also push up the current 7.5 per cent inflation to a higher level.”
‘Food production to face crises’
Addressing the event as an expert, former agriculture secretary Anwar Faruque said, “The cost of rice production will go up by Tk 1,000 per bigha due to the latest hike in fuel prices. At the final stage, the price of coarse rice will go up to Tk 60 per kg in the coming season.” “Considering this, the cost of rice production per hectare (1 hectare equal 3.95 bigha) will go up by Tk 4000.”
He continued, “In Bangladesh’s history spanning 42 years, the country received the lowest rainfall this July, and 30 per cent of the farmers have not been able to plant Aman paddy. The high price of diesel will also discourage farmers from growing rice. Faruque urged the government to immediately announce prices for the procurement of paddy in the next Boro season. “Otherwise, farmers will not be encouraged to produce rice fearing losses, which will jeopardize Bangladesh’s food security,” he added.
‘Commute costs to rise significantly’
Bangladesh Jatri Kalyan Samity’s Secretary General Mozammel Haque Chowdhury said, “We conducted a survey on at least 300 low and middle income people after the fuel price hike announcement. “Our findings show that a commuter’s monthly transportation expenses will go up significantly by Tk 2,100 to Tk 6,000. This will severely impact the public, who are already struggling with high inflation.”
‘Where is Tk 34,000 crore?’
CPD’s Research Director Khandaker Golam Moazzem said, “The state minister of energy had claimed that the Tk 47,000 crore earned by BPC in the last seven years was spent on development projects.
“But the fact is the cost of the 11 ongoing projects of BPC is not that much. Moreover, many of these projects remain at a standstill. As a result, the account of at least Tk 34,000 crore of BPC does not match.”
Demanded to a publication of the BPC account to clarify where this money went, Moazzem said, “There is no transparency and accountability in the BPC, which has a deposit of over Tk 25,000 crore with different banks.”
Bangladesh Knitwear Manufacturers and Exporters Association’s (BKMEA) Vice President Fazle Shamim Ehsan said, “The fuel price will have an enormous impact on the industries as it will directly hit the workers’ cost of living.
“If they leave their jobs due to the increased costs and return to their villages, the industries will suffer the most.”
CPD’s recommendation
The CPD recommended a number of immediate and medium term steps to the government for protecting against major impacts of the fuel price hike, including providing immediate support to the poor and limited-income households across the country. They also spoke in favour of increasing the number and quantity of items under the Open Market Sales (OMS) programme, and making ration cards available to a larger number of people.
For better targeting of the population for these supports, institutional mechanisms should be strengthened and the highest level of transparency should be ensured, CDP added. The think tank’s medium term recommendations for the power and energy sectors are changing the country policy focus on primary energy – which is currently import dependent.
