Bangladesh has no immediate plan to raise fuel prices, state minister says

Global energy prices have soared due to the Russia-Ukraine war, but the Bangladesh government does not think the situation warrants an immediate hike in domestic fuel oil prices.

Senior Correspondentbdnews24.com
Published : 14 March 2022, 02:49 PM
Updated : 14 March 2022, 02:49 PM

The government will keep the prices unchanged even if it has to increase subsidies, said State Minister for Power, Energy and Mineral Resources Nasrul Hamid.

“We want to keep the issue [energy price] under control. Let’s see. The situation is still not out of control,” he told the media on Monday.

The government will increase fuel subsidies even if it has to incur losses -- a long-standing position that may shift if the subsidies become big. “It has not reached that level yet,” Hamid said.

Global oil prices have reached the highest in eight years with Brent crude crossing $100 per barrel after the West imposed unprecedented sanctions on Russia and banned imports of its fuel products due to its invasion of Ukraine.

The prices fell around $5 per barrel on Monday but remained over $108 as investors pinned hopes on diplomatic efforts by Ukraine and Russia to end their conflict, while a surge in COVID-19 cases in China spooked the markets, according to Reuters.

Countries like Bangladesh that depend heavily on energy imports had already been hit by a supply crunch and price hike on the international market. Bangladesh Petroleum Corporation said it was suffering a daily loss of Tk 130 million to keep diesel prices down only by the end of February.

Hamid said BPC was losing around Tk 800 million a day, or nearly Tk 25 billion per month, due to the hike in the international market. “And it is increasing,” he said.

Distributors have also filed petitions with Bangladesh Energy Regulatory Commission to raise gas prices. A public hearing is set to be held on the issue on Mar 21.

Hamid declined to comment on the matter, saying the BERC was looking into it.

A reporter said BPC paid the government Tk 200 billion in taxes from 30 to 35 percent duty in the past two years. Fuel can be provided at lower prices if the duty is waived, the reporter said, and asked if the government has any plan to do so.

Hamid said the government would decide whether to readjust the taxes.

He said the government would need much more money than it had planned two years ago to fuel the oil- and gas-based power plants as the demand for electricity and prices of oil and gas have increased.

He said the Western sanctions on Russian entities have not hit the projects in Bangladesh’s energy sector directly. “Gazprom is working in our gas sector. The Russian contractor is working in Ghorashal. We haven’t faced any problem yet.”