Hint of no fuel oil price cut in Bangladesh in prime minister's remarks

Prime Minister Sheikh Hasina has all but taken the air out of the finance minister’s assurance of a cut in fuel oil prices.

Her remarks in a meeting with business leaders on Thursday reinforced the planning minister’s position a day before that fuel oil prices should not be lowered.

“You are used to these prices. It should not be a problem for anyone,” Hasina said to top business lobby FBCCI leaders

The prime minister is in favour of cutting down Bangladesh Petroleum Corporation’s accumulated losses instead of a price cut.

Oil prices in Bangladesh were last adjusted with the international market in 2013. Per litre price of octane was hiked to Tk 99, petrol to Tk 96, kerosene and diesel to Tk 68.

A shortfall in supplies of natural gas means the government is forced to burn oil – a more costly option – to generate electricity.

However, the international prices have been falling for the last year and the government has taken no initiative to review its rates again.

Last week, just a few days before the government hiked gas and power prices, Finance Minister AMA Muhith said the government had plans to review fuel oil prices this month.

But his colleague at the helm of planning ministry, AHM Mustafa Kamal, on Wednesday took a stand against any reduction of the prices.

The issue of oil price revision came up when the newly elected board of directors of the FBCCI, the leading body of businessmen and industrialists, met Hasina.

“Some people are asking why fuel oil prices are not being cut in the local market despite a drop in international prices,” she said.

The prime minister pointed out that the government had subsidised oil prices when international prices were high.

“The result is Tk 380 billion of liabilities. After the prices went down, we are able to earn some money. We are being slowly able to clear our liabilities. But not much has been cleared until now.”

Hasina added the state-run BPC still needed to pay up debts to the tune of Tk 290 billion and asked, “Why should we shoulder such liabilities?”

She also said the government would lower fuel oil prices if the businesses ‘clear’ the due amount.

BPC Chairman AM Badrudduja said they were making profit selling oil since December last year. 
 
“We had to subsidise a large amount before.”
 
According to BPC data, the country’s expenditure on oil imports declined to Tk 170-180 billion in 2014-15 FY from Tk 380 billion in the previous FY.
 
The government has also raised the retail prices of gas and electricity by 26.29 percent and 2.93 percent, respectively, from this month.
 
After the energy price hikes despite the year-long fall in global oil prices, different quarters had criticised the government move.
 
From general people to businesses and many political parties including a senior leader of ruling Awami League had protested.
 
MP Suranjit Sengupta dubbed the decision ‘unjust’ and called for a rethink.
 
Prime Minister Hasina at Thursday’s meeting agreed with the demand of the businesses for a cut in the interest rate on bank loans.
 
She said, “We’ll try to bring it down to a single digit.”
 
The average interest rate on bank loans was 11.93 percent at the end of March this year.
 
She urged business leaders to take more initiatives to export ‘halal’ meat to the Muslim countries and to take more interest in marine fishing.

The prime minister asked them to create more domestic markets. “Domestic markets will thrive if people’s purchasing capacity rises.”
 
She encouraged all to pay income taxes properly. “If you pay tax, it will help you. When you ask for incentives, where will I find money for that?”
 
FBCCI President Abul Matlub Ahmed promised the government full cooperation.