The government has increased the price of fuel oil by a record margin, effective from 12:00am on 6 August. Energy expert and retired professor of Dhaka University’s geology department Badrul Imam talked to Prothom Alo on the perspective of fuel price hike, its rationale, and its impact on economy and ways out.
Q :
Price of fuel oil is going to see a rise and that was assumed beforehand but was this rise with such a huge margin at once expected in any way?
Such a rise in fuel oil price at once was unexpected for everyone and we are more surprised seeing the method of hiking the price. Public hearing is held for gas price hike; two sides place arguments, thus, we understand how much of price hike is reasonable but this time fuel price was increased unilaterally in the middle of night without talking to the stakeholders. Price of fuel oil never saw such a jump in the history of Bangladesh. State minister for power, energy and mineral resources Nasrul Hamid said the government is pro-people and keeps an eye on them so that people don’t suffer but they did the opposite in case of deciding the fuel price. People’s financial crisis has deepened after the coronavirus pandemic; they are enduring pressure of high inflation; prices of commodities are spiking and hiking of fuel price in a phase became a huge additional burden amid such situation.
Q :
Oil price sees downtrend in global market. How rationale is such a record price hike at this time?
Price of crude oil topped US$ 130 in global market, which is now at US$ 95 and this price may fall further. It has not been rational to raise domestic oil price at this time on the excuse of price hike in global market. Global oil price may fall to $80 in next two-three months and that is a tolerable price, and the government could have waited a little longer. The logic on high global oil price is unacceptable.
Q :
The government says BPC (Bangladesh Petroleum Corporation) has been facing loss for several months and having found no way, oil price was increased, but the government did not decrease oil price amid global price fall during the coronavirus pandemic.
Oil price did not decrease in local market when global oil price saw big fall during the Covid-19 pandemic and at that time, the BPC made much profit and that is about Tk 400 billion. That is people’s money. Had the profit money of the BPC been used in subsidy, there would have a little relief in people’s lives. For this reason, the logic in increasing oil price to adjust global price is not being counted.
Q :
Petrol and octane are gasoline. Yet, why did their prices increase?
Octane and petrol are produced in our country; a little of it is also being imported. The government could have avoided raising the price of octane and petrol, but the octane price was increased on the logic of the affluent are using octane, and how can this logic be accepted?
Q :
A hike in diesel price affects everything from essentials to transport. So, how much is it logical to increase diesel price by 40 per cent at a time?
The rise in diesel price will create the main problem. Hundreds of thousands of farmers depend on diesel for irrigation. A rise in irrigation cost will be a big blow to agriculture and farmers. Again, diesel price will affect all sectors including transport and industrial production. People’s living expense will go up, especially, we are seeing the impact on transport sector in the street. There was no necessity to create this situation. I think the government has taken an imprudent decision quickly.
Q :
The energy ministry say there is a chance of oil being smuggled out to India since the price is how there. How rationale is this?
This logic is not that good. There are management and forces in the country to prevent smuggling. It is not a strong logic at all that we cannot keep oil price lower than India. Oil price has always been higher in India. So, why is this question being raised now?
Q :
How much does energy policy responsible for the existing crisis?
Energy policy means how we are tackling energy supply. If we consider the perspective of 10 to 20 years, we see there are not enough activities to explore fuel oil locally like gas and coal. Bangladesh is a gas-rich country and that is recognised globally. Yet, we have fallen in a big crisis, as we could did not take arrangement to explore that gas. It is an overall weakness of the energy policy. Why does this policy not have anything stating that we will explore local resources and become dependent on it? The question is why did we take import-dependent policy instead of a self-reliant policy? Bangabandhu Sheikh Mujibur Rahman nationalised the country’s gas fields after independence and we are still extracting gas from those fields but our fuel is still import dependent entirely after 51 years of independence. We have built several coal-based power plants to meet the future demand but the 99 per cent of the coal will be from import and this policy is a wrong policy.
Q :
What are the ways out to overcome this crisis?
I do not think there is anything much to do for a short-term solution. If we want to develop a coalmine at this moment, it will take at least four years. This situation arose, as we did not act beforehand. It will also take long to find and extract new gas. So, existing crisis will continue to hurt us for a while. The government said power crisis may last until September and it is somewhat true because temperature will fall in September, decreasing the demand of electricity slightly. Besides, power production will begin in the Rampal plant and electricity imported from India will also start coming, but the situation is temporary. Demand will also rise in the summer. If crisis that persists at the source of fuel supply is not solved, crisis will not go away. Gas search operation will have to be taken on and off the shore to supply fuel from domestic sources and capacity of old gas wells will have to be increased to overcome the short-term crisis.
* This interview appeared in the print and online edition of Prothom Alo and has been rewritten in English by Hasanul Banna