Fuel oil prices hiked
M Azizur Rahman | Tuesday, 1 July 2008
The government raised Monday prices of petroleum products by 33.84 per cent to 50 per cent with effect from Tuesday to offset the impact of overheated international oil market on the domestic economy.
Diesel and kerosene will now be sold at Tk 55 per litre against Tk 40 earlier, octane at Tk 90 and petrol at Tk 87 per litre instead of the previous Tk 67 and Tk 65 per litre respectively.
The government also enhanced price of furnace oil to Tk 30 per litre from its previous Tk 20 and liquefied petroleum gas to Tk 1,000 per litre from Tk 600.
The maximum hike has been made to furnace oil by Tk 10 per litre or 50 per cent followed by diesel and kerosene by Tk 15 per litre or 37.50 per cent, octane by Tk 23 per litre or 34.32 in per cent and petrol by Tk 22 or 33.84 per cent.
"This is an unpleasant decision, but we had no other option to reduce the loss of state-owned Bangladesh Petroleum Corporation (BPC) as the oil prices in the international market have been skyrocketing," chief adviser's special assistant on energy issues M Tamim told the FE.
The BPC will still count losses worth Tk 100 billion annually if the current oil price in the international market remains stable at US$142 per barrel, he said.
"If the petroleum prices were not adjusted the government would have to provide Tk 170 billion to BPC to import oil, which is over half of the country's total allocation for annual development programme of Tk 256 billion," professor M Tamim said.
Considering the mass consumption of diesel and kerosene in remote areas the government will increase subsidy for poor, especially the farmers, he said.
"Tk 5.40 billion has already been allocated in the national budget to provide subsidy to farmers against diesel purchase for irrigation," Mr Tamim added.
Fare in diesel-run public transport will be increased to Tk 1.05 per kilometer with the latest hike in diesel price, commerce ministry sources said.
The ministry, however, directed all to convert the diesel-run public transports into compressed natural gas (CNG) ones by August next.
Transportation cost in carrying goods might increase by 12-15 per cent per tonne at best, the ministry observed.
The oil price hike might raise prices of rice by Tk 0.17- Tk 0.19 per kilogram if carried from the distant places like Dinajpur and Rajshahi, energy ministry said quoting statistics.
Justifying the price hike professor M Tamim said all the neighbouring countries including India, Pakistan and Sri Lanka raised petroleum prices twice in last 15 months, while Bangladesh increased only once.
With the latest hike diesel prices in India, Sri Lanka, Nepal, Malaysia and Indonesia stood at Tk 57.30, Tk 70.40, Tk 69.69, Tk 54.33 and Tk 80.78 per litre compared with Bangladesh's Tk 55 per litre, energy ministry said.
The BPC imports around 3.70 million tonnes of petroleum annually from international market, of which diesel and kerosene account for 2.6 million tonnes and octane only 100,000 tonnes, while petrol and the rest of fuels include jet fuel and others.
The government last increased the petroleum prices between 15 per cent and 21 per cent on April 2, 2007 when the petroleum prices were hovering around $60 per barrel.
With the latest hike the government has enhanced the petroleum price 29th times since independence in 1971.
Diesel and kerosene will now be sold at Tk 55 per litre against Tk 40 earlier, octane at Tk 90 and petrol at Tk 87 per litre instead of the previous Tk 67 and Tk 65 per litre respectively.
The government also enhanced price of furnace oil to Tk 30 per litre from its previous Tk 20 and liquefied petroleum gas to Tk 1,000 per litre from Tk 600.
The maximum hike has been made to furnace oil by Tk 10 per litre or 50 per cent followed by diesel and kerosene by Tk 15 per litre or 37.50 per cent, octane by Tk 23 per litre or 34.32 in per cent and petrol by Tk 22 or 33.84 per cent.
"This is an unpleasant decision, but we had no other option to reduce the loss of state-owned Bangladesh Petroleum Corporation (BPC) as the oil prices in the international market have been skyrocketing," chief adviser's special assistant on energy issues M Tamim told the FE.
The BPC will still count losses worth Tk 100 billion annually if the current oil price in the international market remains stable at US$142 per barrel, he said.
"If the petroleum prices were not adjusted the government would have to provide Tk 170 billion to BPC to import oil, which is over half of the country's total allocation for annual development programme of Tk 256 billion," professor M Tamim said.
Considering the mass consumption of diesel and kerosene in remote areas the government will increase subsidy for poor, especially the farmers, he said.
"Tk 5.40 billion has already been allocated in the national budget to provide subsidy to farmers against diesel purchase for irrigation," Mr Tamim added.
Fare in diesel-run public transport will be increased to Tk 1.05 per kilometer with the latest hike in diesel price, commerce ministry sources said.
The ministry, however, directed all to convert the diesel-run public transports into compressed natural gas (CNG) ones by August next.
Transportation cost in carrying goods might increase by 12-15 per cent per tonne at best, the ministry observed.
The oil price hike might raise prices of rice by Tk 0.17- Tk 0.19 per kilogram if carried from the distant places like Dinajpur and Rajshahi, energy ministry said quoting statistics.
Justifying the price hike professor M Tamim said all the neighbouring countries including India, Pakistan and Sri Lanka raised petroleum prices twice in last 15 months, while Bangladesh increased only once.
With the latest hike diesel prices in India, Sri Lanka, Nepal, Malaysia and Indonesia stood at Tk 57.30, Tk 70.40, Tk 69.69, Tk 54.33 and Tk 80.78 per litre compared with Bangladesh's Tk 55 per litre, energy ministry said.
The BPC imports around 3.70 million tonnes of petroleum annually from international market, of which diesel and kerosene account for 2.6 million tonnes and octane only 100,000 tonnes, while petrol and the rest of fuels include jet fuel and others.
The government last increased the petroleum prices between 15 per cent and 21 per cent on April 2, 2007 when the petroleum prices were hovering around $60 per barrel.
With the latest hike the government has enhanced the petroleum price 29th times since independence in 1971.