Bangladesh slashes duties on fuel, gas imports

The government plans to extract 1,500 million cubic feet gas from local wells by 2028 to boost supply

Import duties have been withdrawn on a range of fuels including diesel and natural gas, while concessions have been granted on the import of CNG, NPG, and LNG.

Notably, the import duty on natural gas has been slashed from 100 percent to 0 percent in one fell swoop. The duty on crude and partially refined petroleum, fuel oils, gas oil, other heavy oils, and preparations has also been waived entirely. Similarly, the import duty on recycled lubricating oil and recycled lube base oil has been reduced to zero.

For CNG, NPG, and LNG, the import duty has been lowered from 10 percent to 5 percent.

The proposed budget also recommends reducing the import duty on crude oil and oil derived from bituminous minerals from 5 percent to 1 percent. For aviation fuels such as jet fuel, kerosene, naphtha, various types of motor and aviation spirits, and white spirit, the government has proposed reducing the import duty from 10 percent to 3 percent, and likewise for light diesel oil and high-speed diesel oil.

As of June, diesel is priced at Tk 102 per litre, octane at Tk 122, petrol at Tk 118, and kerosene at Tk 114.

While global oil prices fluctuate regularly, fuel prices in Bangladesh used to change only occasionally, resulting in either consumer losses or financial strain for the state-run Bangladesh Petroleum Corporation (BPC).

In response, the government introduced an automatic monthly fuel pricing system at the consumer level starting in March last year.

This system adjusts domestic fuel prices based on global market trends. With the removal of import duties, overall fuel prices in Bangladesh may see a reduction.

PUSH TO TAP DOMESTIC SOURCES

To cut costs, Finance Advisor Salehuddin Ahmed has pledged to increase the supply of gas from domestic sources.

"A plan has been made to supply 648 million cubic feet of gas from domestic sources within this year and to extract an additional 1,500 million cubic feet gas from local wells by 2028," he said in his budget speech on Monday.

Currently, the country requires around 3,700 million cubic feet of gas per day, but local sources supply a maximum of 2,000 million cubic feet. The remainder is imported as LNG from international markets, with the government forced to provide significant subsidies to offset volatile global prices.