Government cites continuous loss as reason for diesel price hike

The government has defended the steep rise in the diesel price, saying its hands were tied after incurring a loss of Tk 114.76 billion in the past five months due to a hike in global prices.

The government will have to subsidise the loss between Tk 1.58 and Tk 5.62 per litre from June to September and finally the loss was Tk 13.01 per litre in October, the power, energy and mineral resources ministry said in a statement on Friday.

On Wednesday, the ministry announced the new price of diesel and kerosene , raising it by Tk 15 to Tk 80 per litre. The 23 percent hike is the biggest in Bangladesh's history, industrialists said.

The ministry highlighted India’s readjustments as an example of how neighbouring countries are dealing with the crisis. On Monday, the price of diesel in India was Rs 101.56 or Tk 124.41 – Tk 59.41 higher than the price in Bangladesh, according to the notice.

It also said Bangladesh Petroleum Corporation was losing Tk 200 million daily by selling diesel and furnace oil at lower prices. In October, the state-owned corporation suffered a loss of over Tk 7.26 billion.

The government had previously fixed the prices of petroleum products in April 2016.

In Friday’s statement, the ministry said BPC suffered the loss, especially on account of diesel, from the beginning of 2021 due to global market volatility.

The BPC projects worth Tk 337.34 billion will be in jeopardy and energy security will be threatened if the losses continued, the ministry said.

It also claimed diesel price is still lower in Bangladesh than those in the neighbouring countries.

The statement said diesel price was lowered by Tk 3 per litre in the last adjustment in 2016. The price did not change in five years and the BPC deposited Tk 100 billion to the national exchequer in this period.