Govt rules out oil price hike before April

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M Azizur Rahman
The government has ruled out any increase of fuel prices until the end of the current 'Boro' paddy season in April despite soaring losses by the lone state-owned oil importer.
"We have no plan to increase oil prices before the end of Boro paddy season in April," special aide to the chief adviser M Tamim said.
"At present, we are not thinking about any upward adjustment of fuel prices despite huge losses by the Bangladesh Petroleum Corporation. Fuel prices will remain the same at least until the completion of the rice irrigation season in April," he said.
"The government's main aim is now to increase the output of rice at any cost and farmers will continue to get cheap diesel to irrigate their rice field," he added.
Tamim's comments came a day after the Bangladesh chief of the Asian Development Bank (ADB) Hua Du urged the government to hike the fuel prices, saying the low rates are not helping the cause of the poor.
Du said that the government should instead give direct fuel subsidy to the poor, while raising the existing prices, which at present is only benefiting the rich people in the country.
The government last raised the fuel prices in April 2007 immediately after it took over power after a political turmoil.
But since then it has deliberately kept the rates low despite the oil price in the international market have perched above 90 dollars a barrel in the recent months.
The government said the prices were kept below the international level in a bid to calm down soaring inflation, which has crossed double digit, and assist the poor farmers who need huge supply of diesel and kerosene.
According to the energy ministry, the price of diesel and kerosene is at least 45 per cent lower than the international market. The government has been subsidising the prices by borrowing from the commercial banks.
But the BPC said the low fuel prices in the domestic market was taking its toll on the financial health of the corporation, which is the lone state-owned oil importer.
"The corporation has already incurred a loss of over Tk 30 billion in the first seven months of the current fiscal because of the low fuel prices at the domestic market," said BPC chairman Anwarul Karim said.
He said the loss in the first five months up to November 2007 was around Tk 11 billion but it rocketed in the next two months due to overheated global oil market.
"The corporation is in dire strait. It is set to count a loss of over Tk 65 billion in the current fiscal if the fuel prices are not adjusted upward," Karim said.
"Currently the BPC is now incurring a loss of around Tk 18 for every litre of diesel and kerosene it sells in the local market," he added.
He said the corporation, however, does not make any losses in petrol and octane. But the consumption of the two high-graded gasoline is paltry in Bangladesh compared to diesel and kerosene.
The BPC last year imported of 3.8 million tonnes of crude and refined oil, with diesel and kerosene comprising over 70 per cent of the import.