Pilferage, waste reduction can help cut fuel prices up to 15pc

Fuel prices can be cut up to 15 per cent by stopping pilferage, adjustment of taxes, ensuring transparency and preventing misappropriation, says a study report.
The findings were placed while the Centre for Policy Dialogue (CPD) Thursday proposed an Artificial Neural Network (ANN)-based fuel-oil-pricing model.
Its researchers at a policy dialogue, titled 'Market-based Fuel Pricing: Government-led Initiatives and Possible Revision', said the petroleum-fuel prices could be reduced substantially if the new pricing formula is introduced.
The CPD study report says, "Stopping pilferage, adjustment of taxes, ensuring transparency and prevention of misappropriation can help prices of fuels to be reduced up to Tk 15."
This innovative model, presented at the function at a city hotel, aims to establish a more transparent, stable, and equitable pricing system while ensuring energy security and facilitating a transition to sustainable energy.
The CPD research, supported by the Australian High Commission, highlighted flaws in the current automated-pricing mechanism introduced in March 2024, including lack of transparency and susceptibility to exchange-rate shocks.
The ANN model addresses these issues by incorporating fiscal constraints and consumer affordability, aligning with international best practices, and fostering a balanced pricing environment.
Speakers at the event emphasised the urgency of revising the government-broached pricing formula.
Senior Research Associate of the CPD Helen Mashyat Preoty focused on ANN model's predictive capabilities which could help policymakers and consumers plan for energy transitions and mitigate the effects of price fluctuations.
By aligning pricing policies with market dynamics and long-term energy strategies, the proposed reforms aim to support sustainable development goals and secure an equitable energy future for Bangladesh.
Research Director of the CPD Dr Khondaker Golam Moazzem pointed out that Bangladesh Petroleum Corporation (BPC) has not required government subsidy since 2015 as it is earning substantial profits.
Adjusting these profit margins could benefit consumers directly and lower electricity costs, he argues.

He said ongoing reforms in various sectors are also impacting the energy sector.
"Fuel prices should be set in a way that prioritises consumer interests. BPC currently earns substantial profits without needing subsidies. Adjusting these profits could benefit consumers and positively influence electricity costs."
Dr Moazzem also opines that it is unacceptable to increase gas prices at the same rate across the board for all levels of customers and only in a gap of one year.
"The BPC is reconciling previous losses by increasing prices at an unreasonable rate for three years. International practice should be taken into account in determining the price of electricity and gas."
The policy think-tank also calls for empowering Bangladesh Energy Regulatory Commission (BERC) as the central authority for fuel pricing. Immediate approval for the BERC draft regulations would enhance transparency and accountability. Regular public hearings, they suggest, could involve consumer input and strengthen trust in the pricing process.
BERC Chairman Jalal Ahmed said the commission is now empowered to make the pricing model, which should be a cost-plus formula.
Chairman of BPC Md. Amin ul Ahsan stated that fuel-oil imports are planned from January to June with an opportunity to lower import costs further. However, he noted that limited storage capacity and the rising dollar rate added Tk 5.0 billion to expenses.
"Efforts to expand storage capacity are currently underway, which is expected to reduce both costs and fuel prices in the future," he told the meet about possible ways of fuel-price cuts.
Energy expert Professor Dr M. Shamsul Alam criticised the fuel- pricing practices by the past government. He noted that previous administrations used to set fuel prices to protect their own interests, whereas the current government lacks such motives and should therefore prioritise the public welfare in determining fuel prices.
Highlighting government's fundamental responsibility to ensure energy access, akin to food security, Dr Alam pointed out that the BPC generates profits of Tk 130-140 billion annually. He argued that collecting both profits and taxes simultaneously is beyond government mandate. He also criticised the practice of holding meetings in Singapore and Dubai to determine fuel prices, saying that these meetings unnecessarily increased costs under the guise of price-setting.
Deputy Head of Mission of the Australian High Commission in Dhaka Clinton Pobke said policy debate helps create a better policy.
Humayun Rashid, Managing Director of Energy Pack and Vice-President of BIPPA, questioned the rationale behind energy subsidies. "Who is truly benefiting from the subsidies?"
He notes that gas prices have risen significantly, far beyond Tk 15 from previous years, despite the expectation that gas would be supplied without incurring losses.
He expressed concern over the recurrent losses being ignored, particularly by Titas Gas, and called for proper policies and fair gas pricing to support critical industries such as the garment sector. Tauhid Mawla, a senior energy expert at the World Bank, emphasised that under a market-based pricing system, domestic energy prices should not increase by more than 10 per cent, regardless of international market fluctuations. He also recommends that domestic prices be reduced by at least 5.0 per cent whenever international prices decline.
Noting a significant use of diesel among the country's marginalised communities, Mr Mawla suggests that a price revision for diesel should be considered to ease their burden.
Director of EMA Power Investment Ltd Abu Bakar Siddique Ali Chowdhury feels the government of Bangladesh needs to decide the role of BPC. He pleads that the pricing model should have a levy on climate change and consumers should pay for it.
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