Fuel-poverty, a potential threat to Bangladesh

A few years back, a study of the International Monetary Fund (IMF) had shown that a 10 per cent increase in global fuel price causes increase domestic inflation in any country by 0.24 per cent within a certain period. So, Bangladesh, depending widely on imported fuels, is obviously unable to escape oil-fuelled inflation.

The government here increased price by Tk 34 to Tk 46 on a litre of fuel at the beginning of August and later reduced that by Tk 5 per litre. And, as anticipated, increased fuel prices have instigated a fresh and strong wave of inflation. 

Hike in oil prices has heated up media discussions, blame games and laughing trolls on social media walls; but the entire hullabaloo surrounding the issue suppressed a serious phenomenon- that is “fuel-poverty.”

The Copenhagen School of Energy Infrastructure’s Professor Toraj Jamas says that even one per cent increase in the price of energy in any country brings some risks for increasing overall poverty to some extent.

Researchers in a developed country like the UK see fuel price as a major issue for regarding the economic health of the country. After an 80 per cent hike in UK fuel price, last month, researchers at the UCL Institute of Health Equity released a study showing that 55 per cent of the UK households are now at risk of fuel poverty. They said millions of British families are at risk now of not being able to heat their homes in the coming winter. Indeed Fuel poverty, as a concept, can be traced back to the UK in the early 1980s, when it was first recognised that lower income consumers needed to spend a larger percentage of their income on keeping warm.

Whereas, we, in Bangladesh, are not giving due importance to the risk of neo- poverty and economic disparity in the country; created by record hikes in kerosene, diesel, octane and petrol-prices.  Even after a reduction by five taka per litre, almost 40 per cent increase remained effective in the price of fuel oils. There is, unfortunately, no short-term solution to the crisis the people are currently facing.

Are we thinking about its effective impact on the cost of irrigation of a farmer? Are we measuring gravity of poverty to be faced by a Nasimon driver, who transports sacks of paddy or vegetables from a farmer’s house or field to the village market? 

Are we measuring the impact of cost burden to boatmen, who take villagers from shore to shore of a river by diesel-powered boat? Have we calculated cost burden of fishermen who net Hilshas on Padma or Meghna using their diesel- powered boats? 

Most of such marginal stakeholders of Bangladesh’s economy will be poorer now due to the impact of exorbitant increases on the prices of fuel oils.

In the last ten years, the prices of LP Gas for kitchens in Bangladesh have also increased by 300 to 400 per cent. We have no study on how this increase on the cost of kitchen gas has raised the effective cost burden on the lives and livelihood of workers.

The workers in and at the outskirts of Dhaka usually pay electricity bill to their landlords counting electric lamps and fans in their rented rooms. So, when electricity prices increase by 20 per cent, electricity bills for workers raised by 50 per cent if not 100 per cent. We have not studied how this increase has pushed up the effective burden in cost of living of the workers.

Let us come back to fuel prices again. Bangladesh has increased prices by 40 to 50 per cent this time. So, according to IMF measurement we have already invited more 1.2 per cent inflation. Indeed, the rate of inflation will be more in Bangladesh because when increased price of diesel raise cost of truck fares by less than 50 paisa for transport per kilogram of rice on an average, price of rice increases by Tk 5 per kilogram. Such irrational increases on the cost of goods have already been reported on news media.

In fact, costlier goods and services will increase turnovers of producers or sellers. Such increases can also expand GDP of the country cumulatively but that growth is not positive growth. When the growth of an economy is generated by increase in prices of goods and services, not by increased incomes, neo-poverty and inequality come inevitably. National income may rise now but the incomes of the common people will not be increased at the same rate. So, any growth in Bangladesh now will be inflation driven growth.

Employees in many formal and informal sector industries in Bangladesh don’t get annual increment on their salaries. So, their incomes decrease at the rate of inflation and they fall into poverty. When fuel prices were raised on the previous occasion, the government argued that prices in neighbouring India are high. India still has many types of social safety nets for protecting poor and ultra-poor. Bangladesh’s government food rationing programme is also much weaker than that in India. So, comparing India with Bangladesh in this particular area is rather irrelevant or unrealistic. In the current age, fuel price fuelled inflation is always assessed as major reason for falling living standards of people. Increased fuel prices are creating inflationary pressures on all sectors of economies around the world, inviting neo-poverty even in rich countries let alone Bangladesh.

Unless the government can find new streams of revenue to create fiscal space for subsidies, the public will bear the brunt of the inflation.

These crucial points are not expected to be thought and addressed by producers, shop owners or industrialists. These should be thought by sociologists, economists, and above all, by the powers that be. The stakeholders urgently need to work towards a consensus on the country’s long-term energy goals.

The writer is a broadcast journalist. She can be contacted at [email protected]