The government is reportedly considering to raise fuel-oil prices again. However, the extent of such a hike is yet to be decided and the time of its enforcement is still under examination.
However, the price of electricity has already been enhanced at the retail consumer level by 6.69 per cent, on an average, with retrospective effect from March 01 this year by the Bangladesh Energy Regulatory Commission (BERC).
And now, the anticipated hike in fuel-oil prices will come into effect at an unpropitious time; the lower- and middle-income groups of the society are already otherwise overburdened with earlier hikes in diesel and kerosene prices by 38.64 per cent and that of retail power price by 60 per cent over the past two to three years.
Against this backdrop, a fresh hike of fuel oils will certainly have its more pronounced impact on the price situation, particularly the non-food inflation. The consumption basket, as experts say, will be affected through squeezing of the buying-capacity of lower- and middle-income people. The budget-cut by the fixed- and middle-income people for buying non-food items may impact the import trade as well. The growth rate of the country's gross domestic product (GDP) that is largely driven by consumption, will then come under some sort of adverse pressure.
A report in a contemporary this week said the move to enhance the fuel-oil prices is being taken with a view to raising revenue by, at least, Tk 10 billion a year. However, the government is already making some profit from the sector. In order to generate more revenues, the government had increased the tariff value of crude petroleum oil to $40 per barrel, up from $32 per barrel and that of other refined petroleum products to $0.40 cent per litre, up from $0.31 per litre.
The previous rate of tariff value enabled the government to earn about Tk 24 billion in fiscal year (FY) 2013-14 by realising taxes from the Bangladesh Petroleum Corporation (BPC), even after paying the state-run agency Tk 24 billion in subsidy. The BPC, however, incurred a loss of about Tk 30 billion last fiscal. The hike in tariff value will reportedly cause the BPC to count an additional Tk 10 billion in loss a year, in the form of tax that it would require to pay to the government.
In order to recoup the losses, the government does always tend to shift the entire burden onto the consumers by increasing the fuel-oil prices. Showing the BPC as a loss-making concern, it raised the price of diesel and kerosene by Tk 24 per litre, from Tk 44 to Tk 68, 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 present government, in its two consecutive terms, has also increased retail power prices by 63.56 per cent, up from Tk 3.76 a unit to Tk 6.15 on an average, in seven phases between March 2010 and March 2014.
There is no denying that such increases in the prices of fuels and in electricity tariff during all these years have significantly pushed up the cost of living of the common people. The costs of production and transportation also went up forcing people to buy commodities and services at higher prices.
In fact, each time the prices of fuels were increased, buses, pick-ups, and auto-rickshaws increased fares, rickshaw-pullers, using that as an excuse, doubled their rates, the pullers of rickshaw vans also followed suit, and vegetable vendors raised prices on the ground of increased transport costs. The people faced similar chain-effects in transport fare and house rents; the prices of other goods and services immediately shot up after the authorities concerned increased the prices of fuel oils and power.
The price of compressed natural gas (CNG) was also enhanced in order to rationalise its prices with those of diesel and octane. The annual subsidy requirement for fuel oils was increased due to additional import of diesel and furnace oil by 1.0 million to 12 million tonnes a year to feed the short-term rental plants. Similarly, the government subsidy in buying electricity from the rental suppliers was increased for additional payment in rent on account of the plants in the private sector.
Meantime, some critics point out that the multinational capital donors do always pursue the government to withdraw subsidy from fuel and electricity to make the sector viable for private business. In exchange, the agencies provide assistance to the country, in support of the government's budgetary management operations and for development projects.
The country's transport sector leaders have, of late, voiced their discontent over the fresh bid to raise the fuel-oil prices. They say such hikes will make transportation of goods and passengers more costly. The government, according to them, should take necessary measures to check its existing system loss in the petroleum, power and energy sectors, instead of making any enhancement of their prices.
Before enforcing any hike in fuel prices, the government, as the analysts suggest, needs to assess the impact of such price adjustments on different sectors of the economy. The adjustment of fuel-oil prices should particularly be made in a manner so that the hike affects the less number of people.
szkhan@dhaka.net
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