Spike in diesel, kerosene price to put pressure on public life

The government has suddenly raised the price of kerosene and diesel to recover the loss due to the surge of prices in the international fuel market. As per the notice issued by Ministry of Power, Energy and Mineral Resources on Wednesday night, the price of diesel and kerosene has been increased by Tk 15 standing at Tk 80 per litre. The price per litre was Tk 65 earlier. The new price has been effective from 12:00am Thursday.

According to media reports, the owners of public transport and covered vans declared to go on strike for an indefinite period from Friday morning. Transport owners said they have to increase the fares to cope with the price surge. Bangladesh Truck-Covered Van, Tank Lorry and Prime Movers Owners and Workers Coordination Council also express solidarity with this decision.

We know from our previous experience that the government will bow to the demands of the transport owners. That means transport fare will surge and the people will have to bear the brunt and it will definitely affect the market. On the other hand, the price of Liquefied Petroleum Gas (LPG) has increased from 4 November.

This hike in the fuel price at the time when economy started to come around will only make the life of people harder. The concerned ministry said, the price has increased in international market following which various countries including our neighbouring country regularly readjust the price.

The government has been selling diesel at Tk 13.01 lower per litre and furnace oil at Tk 6.21 per litre, lower than their imported prices. The amount of loss stands at Tk 200 million per day. Bangladesh Petroleum Corporation counted a loss of Tk 7.27 billion in October.

Notably, the government did not reduce the price when the price declined in global market. The price was higher in our market compared to that in the international market during the readjustment in 2016. Moreover, most of our imported oil is refined while the price of crude oil much lesser. The price would have been lower if there were adequate number of refinery factories according to plan as it would reduce the import cosst.

India reduced the price of petrol and diesel by Rs 5 and 10 respectively when Bangladesh increased the price. The government of India announced that it planned to reduce the price so that the farmers can benefit. The central government also urged the state government to reduce the VAT on fuels to help the consumers.

It should be reconsidered whether the price hike by 25 per cent is reasonable in Bangladesh. Diesel is widely used in farming apart from transports. In that case, the production cost of agricultural products will increase due to high fuel price. Already the price of daily essentials including rice went sky-high. Low income people will face an extensive impact due to this price hike. We believe the government will not make any such decision that will make people’s life harder. Even if the government reduces import duty and VAT, it can bring fuel prices to a more tolerable level.