Slight cut in domestic oil prices this week
Sunday, 21 December 2008
FHM Humayan Kabir
The government is likely to cut the domestic oil prices at a range of two to five taka per litre within this week because of its dramatic slip in the international markets, top officials said Saturday.
"We'll reduce prices of different items of petroleum oil by Tk2.0 to Tk5.0 per litre," Special Assistant to the chief adviser, M Tamim, told the FE.
Experts, however, said the price slash move in local market at the proposed tiny margin would not be realistic compared to the present falling price in the international market.
Now the crude petroleum is trading at $34 per barrel, five-year record low, in the international market.
Last price adjustment in Bangladesh was done on October 27 this year when the crude oil was trading at US$60 per barrel in the global market coming down from its record peak at $147 per barrel in July 2008.
"Slashing of the domestic petroleum prices at the proposed margin will not be realistic compared to current drastic fall in the international market," a senior official of Bangladesh Energy Regulator Commission (BERC) said requesting anonymity.
He said since the crude oil price has now fallen to half from the trading price in October, prices of fuel including diesel, kerosene, petrol and octane should be cut at a rational margin.
When asked, M Tamim said: "A major review of the domestic and international fuel prices will be done in January next year. In the meantime, we will bring down the price to some extent within this December."
Defending the proposed tiny price cut, the special assistant said, as the oil prices in neighbouring India will be higher than the proposed price, we need to ensure a rational adjustment to check smuggling.
"Diesel price in India is Tk48 per litre which is equal to that in Bangladesh at this moment. So, we have to consider the issue during the price cut," he said.
He said some 0.2 million tonnes of petroleum are smuggled in a year due to lower price in the domestic market than the higher price in the neighbouring country.
"Price cut initiative by the government is laudable. But the prices of the fuel should be rational," BERC Chairman Golam Rahman told the FE Saturday.
"The energy division sent their price cut proposal to BERC last week. We reviewed that. We told the division that prices should be reduced," he said.
In October last, the government in an unprecedented move reduced the prices of fuel oils by nearly 11.73 per cent on an average against the backdrop of a substantial fall in prices in the international market.
In the readjustments, prices for both diesel and kerosene were fixed at Tk 48 per litre, reflecting a 12.73 per cent cut over their previous price of Tk 55 per litre.
The price of petrol was reduced by 10.34 per cent to Tk 78 per litre from its previous rate of Tk 87 per litre and octane by 11.11 per cent to Tk 80 per litre from Tk 90 per litre previously.
Following the dramatic fall of crude oil to $60 per barrel from record high of $147 per barrel in July, the energy division prepared an automatic price adjustment formula for the domestic market.
As per the formula the government would review the prices of fuel oils after every three months.
As per the formula, if the petroleum prices fluctuate at a rate of 10 per cent and above in the global market, then the rates will be readjusted further at the domestic level.
The government is likely to cut the domestic oil prices at a range of two to five taka per litre within this week because of its dramatic slip in the international markets, top officials said Saturday.
"We'll reduce prices of different items of petroleum oil by Tk2.0 to Tk5.0 per litre," Special Assistant to the chief adviser, M Tamim, told the FE.
Experts, however, said the price slash move in local market at the proposed tiny margin would not be realistic compared to the present falling price in the international market.
Now the crude petroleum is trading at $34 per barrel, five-year record low, in the international market.
Last price adjustment in Bangladesh was done on October 27 this year when the crude oil was trading at US$60 per barrel in the global market coming down from its record peak at $147 per barrel in July 2008.
"Slashing of the domestic petroleum prices at the proposed margin will not be realistic compared to current drastic fall in the international market," a senior official of Bangladesh Energy Regulator Commission (BERC) said requesting anonymity.
He said since the crude oil price has now fallen to half from the trading price in October, prices of fuel including diesel, kerosene, petrol and octane should be cut at a rational margin.
When asked, M Tamim said: "A major review of the domestic and international fuel prices will be done in January next year. In the meantime, we will bring down the price to some extent within this December."
Defending the proposed tiny price cut, the special assistant said, as the oil prices in neighbouring India will be higher than the proposed price, we need to ensure a rational adjustment to check smuggling.
"Diesel price in India is Tk48 per litre which is equal to that in Bangladesh at this moment. So, we have to consider the issue during the price cut," he said.
He said some 0.2 million tonnes of petroleum are smuggled in a year due to lower price in the domestic market than the higher price in the neighbouring country.
"Price cut initiative by the government is laudable. But the prices of the fuel should be rational," BERC Chairman Golam Rahman told the FE Saturday.
"The energy division sent their price cut proposal to BERC last week. We reviewed that. We told the division that prices should be reduced," he said.
In October last, the government in an unprecedented move reduced the prices of fuel oils by nearly 11.73 per cent on an average against the backdrop of a substantial fall in prices in the international market.
In the readjustments, prices for both diesel and kerosene were fixed at Tk 48 per litre, reflecting a 12.73 per cent cut over their previous price of Tk 55 per litre.
The price of petrol was reduced by 10.34 per cent to Tk 78 per litre from its previous rate of Tk 87 per litre and octane by 11.11 per cent to Tk 80 per litre from Tk 90 per litre previously.
Following the dramatic fall of crude oil to $60 per barrel from record high of $147 per barrel in July, the energy division prepared an automatic price adjustment formula for the domestic market.
As per the formula the government would review the prices of fuel oils after every three months.
As per the formula, if the petroleum prices fluctuate at a rate of 10 per cent and above in the global market, then the rates will be readjusted further at the domestic level.