A crucial meeting at the Ministry of Commerce concluded on Sunday without any decision against refiners' demand for a Tk 18 hike in the price of soybean oil per litre, leaving both the industry and consumers in a limbo.
The Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association (BVORVMA) formally submitted their proposal on March 27, seeking to raise bottled soybean oil prices to Tk 193 from Tk 175 a litre.
The refiners' request comes as the government's VAT exemption on crude edible oil imports and production expired on March 31, which is expected to raise production costs.
The proposed hike will also impact loose oil varieties as per the proposal, potentially increasing prices to Tk 170 from Tk 157 per litre.
Accordingly, the ministry organised the meeting at the secretariat on Sunday.
Commerce adviser Sheikh Bashir Uddin, Bangladesh Trade and Tariff Commission chairman Dr Mainul Khan, additional secretary Abdur Razzaque, a National Board of Revenue (NBR) representative and refiners joined it.
Mr Razzaque said, "We're evaluating all aspects, including consumer impact and global market trends, before making any determination."
However, the NBR exempted taxes and VAT on all types of edible oils, including sunflower, canola, soybean and palm oil, in mid-December 2024.
This move aimed at ensuring an adequate supply in the market and making retail prices more affordable for consumers who are currently facing higher costs due to shortages of these essential kitchen items.
The NBR then announced that import duty, regulatory duty and advance income tax (AIT) on both refined and non-refined edible oils would be exempted until March 2025.
VAT paid by final consumers was also waived during the same period, with VAT on imports of edible oils reduced to 5.0 per cent from 15 per cent.
As a result, importers were only required to pay 5.0 per cent VAT on edible oils until March 31, with no additional taxes.
Tariff Commission spokesperson Mahmudul Hasan said the meeting ended without any decision, and the next one might take place on Tuesday.
According to a commerce ministry official, the ministry will request the NBR to extend VAT exemption until the end of the current fiscal year.
However, NBR officials indicated that they were yet to make any decision regarding the extension of the VAT exemption facility.
Taslim Shahriar, deputy general manager of Meghna Group of Industries, said: "As the VAT exemption period ended on March 31, refiners will need to pay more. Global prices have also seen an uptrend for the last few months."
"We expect the government to provide a logical solution in the next meeting. If the NBR extends the facility, most of the problems could be resolved," he told the FE.
SM Nazer Hossain, vice-president of the Consumers Association of Bangladesh, said edible oil constituted a significant portion of household budgets, especially for low-income families.
He urged the NBR to simply extend the VAT exemption, which seems logical given a notable increase in import costs due to the rising dollar price.
Meanwhile, global prices of soybean oil have hovered between $1,050 and $1,100 a tonne for the past six months, according to global commodity portals.
The edible oil market remains static so far as city groceries in Bangladesh as they still have products ahead of Eid.
Grocers have indicated that company distributors have ceased receiving any orders following their plans to raise prices.
According to Mohammadpur grocer Farid Alam, prices are likely to see a hike once their old stocks run out, as distributors are not accepting any orders.
Bangladesh consumes 2.3-2.4 million tonnes of edible oil annually, with imports meeting 95 per cent of demand.
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