Last year, while announcing the increase in electricity prices, State Minister for Energy and Power Nasrul Hamid stated that no more subsidies would be provided on electricity.
He emphasised that if prices rise in the international market, they will also increase in the domestic market. However, if this is indeed the government's policy, why was the price raised domestically even when it fell in the international market?
According to Prothom Alo news, when fuel oil prices increased a year and a half ago, it was promised that if prices fell in the world market, they would also decrease domestically.
However, this did not materialise. Bangladesh Petroleum Corporation (BPC), a government organisation, has been profiting from the additional funds collected from customers over the past year and a half. Additionally, the government has earned significant revenue from fuel oil duties and taxes as well as collected dividends.
In August 2022, fuel oil prices surged by up to 42.5 per cent before being reduced by Tk 5 per litre. Presently, diesel and kerosene retail at Tk 109, petrol at Tk 125, and octane at Tk 130.
According to the Bangladesh Petroleum Corporation's (BPC) annual report, the corporation netted a profit of Tk 45.86 billion in the last fiscal year (2022-23), with Tk 2 billion disbursed to the government as dividends. During the initial six months (July-December) of the current fiscal year, BPC amassed over Tk 4 billion in profits.
Energy experts and economists contend that prolonged inflationary pressure has burdened the people, while the government struggles to rein in market prices. Meanwhile, the government capitalises on increased gas prices to generate revenue.
However, there was an opportunity to lower fuel oil costs, potentially reducing prices across various market sectors, especially in agricultural production where fuel accounts for a significant cost. Diesel, constituting 75 per cent of the nation's fuel consumption, has contributed to BPC's profits over recent months.
Before this, the organisation recorded profits for seven consecutive years. However, following a loss of Tk 27.05 billion in the financial year 2021-22, fuel prices were increased once again. In March 2022, the price of crude oil peaked at USD 140 per barrel (158.99 liters) in the world market, with diesel prices surpassing USD 170 per barrel. Subsequently, prices gradually declined.
The government set the new diesel price in the country based on an average of USD 139 per barrel in the world market. Despite the price of fuel oil dropping below USD 70 in the world market last year, the current crude oil price stands at USD 80, with diesel priced at USD 98. Consequently, there is no rationale to maintain fuel prices at previous levels in the domestic market.
If the domestic oil prices are increased in line with the international market, it stands to reason that they should also be reduced when international prices decline. The country's energy market has endured significant strain due to the dollar crisis, and the government cannot afford to further burden consumers in its efforts to address this crisis. An increase in fuel prices would have adverse effects on every aspect of people's lives, including increased production costs in industries.
The well-being of billions of customers should not be compromised for the profit of a company. Therefore, adjusting oil prices immediately, rather than waiting until April, would be a prudent course of action.