FUEL OIL PRICES : Bangladeshis pay more than its neighbours

Manjurul Ahsan

Bangladeshis pay highest for fuel oils like diesel, octane and petrol, after the people of Maldives, among the South Asian nations and many other lower-middle income economies.
With very few exceptions, the prices of fuel oils have been reduced in the local markets of all the importing countries in the past one year after the prices started declining in the international market since June 2014.
Bangladesh remains in the exception list after the price of Brent Crude in the international market fell down to nearly $50 per barrel from $117 in June 2014. The prices of refined petroleum products like diesel, furnace oil, octane and petrol have fallen accordingly.
Higher prices of fuel oils locally has kept cost of living high as it inflates essential commodity prices, including kitchen market products, through the rise in transport fare.
The prices of diesel and furnace oil also affect the cost of power generation and consequently raise the cost of industrial production.
While explaining the effect of higher fuel oil prices in the local market, Debapriya Bhattacharya, an economist and Distinguished Fellow of Centre for Policy Dialogue, said manufacturers would face challenges in global market with their higher production cost.
Energy adviser to Consumer Association of Bangladesh Shamsul Alam said the government had snatched the rights of consumers by not reducing the prices of fuel oils in line with the prices in the international market.
The price of diesel, a major fuel for transport and power sector, in Bangladesh is $0.84 per litre or Tk 67 while the price is between $ 0.68 and $0.83 in five other South Asian countries, according to data published on August 24 by GlobalPetrolPrices, a weekly data provider on fuel prices.
Diesel price is $1.01 per litre in Maldives.
The data also shows that people in Malaysia, Philippines, Vietnam and Thailand pay less for fuel oils than people in Bangladesh pay.
The government of Bangladesh, citing the higher prices in the international market, raised the price of diesel and kerosene by Tk 24 per litre and that of petrol and octane by Tk 22 per litre in five phases between May 2011 and January 2013. It also increased the price of furnace oil by Tk 36 per litre, from Tk 24 to Tk 60 per litre, in 2011.
The Bangladesh Energy Regulatory Commission had also raised the price of compressed natural gas or CNG by 66.67 per cent in 2011 in a bid to rationalise the price with fuel oils in transport sector.
Now, the state-run Bangladesh Petroleum Corporation realises Tk 32 to Tk 42 a litre more from the consumers of the fuel oils.
The net supply cost of diesel and kerosene stood at about Tk 35 per litre while the consumers in transport sector, electricity generation and rural lighting pay Tk 67 per litre, according to BPC data.
Similarly the consumers now pay Tk 40-Tk 42 more than the supply cost of each litre of petrol and octane, which is Tk 32 per litre for furnace oil.
Finance minister AMA Muhith on August 25, however, said that the government would sit to revise the prices of fuel oils in September.
The energy commission, on Thursday, once again increased the prices of electricity by 2.93 per cent and natural gas by 26.29 per cent at consumer level with effect from September 1, apparently under the pressure of the government.
With the latest hike, the energy commission has so far raised the average retail price of electricity by 69.25 per cent, up from Tk 3.76 per kilowatt-hour or unit to Tk 6.33, in eight phases, between March 2010 and September 2015.

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