People in Bangladesh are likely to pay more for fuel oil, gas and power as Nasrul Hamid says the country needs to readjust the prices to a global hike.
The time has come to readjust the prices to a “reasonable” level, the state minister for power and energy told reporters in Dhaka on Friday.
With its foreign currency reserves dwindling, Bangladesh has stopped buying liquified natural gas or LNG from the spot market due to a price hike.
The decision affected electricity generation as more than 50 percent of the country’s power plants are fuelled by gas. The government also suspended production at power plants run by costly diesel.
Due to the supply crunch, authorities have resorted to recurring power outages. Ministers and advisers have called for patience to tackle the economic crisis triggered by the Russia-Ukraine war. Businesses have also complained about disruptions to production due to power cuts.
In this situation, officials have been hinting at raising the prices over the past few days. At a seminar organised by the Federation of Bangladesh Chambers of Commerce and Industry on Thursday, some businessmen suggested raising prices of fuel oil and power to ensure uninterrupted supply.
“We are waiting for the adjustment to power tariffs. We want another adjustment to gas. And we will have to go for an adjustment to oil prices too,” Nasrul said on Friday.
He said the government will try to keep the prices at a tolerable level, taking into consideration the effects of the price rises on people.
“We will make the adjustments regularly, if necessary. If global prices decrease, domestic prices will go down at the same rate.”
The government has raised gas prices recently. Nasrul said that the hike was done following the situation in December last year. “I think we need another adjustment to gas prices.”
Nasrul said the government suffers losses whenever fuel oil prices rise above $70 per barrel in the global market as it subsidises the prices to keep the cost of living down. Global oil prices have been hovering around $100 per barrel for several months.
Noting that the state-run Bangladesh Petroleum Corporation, or BPC, suffered Tk 80 billion losses due to the global oil price hike, he said, “I think we should need an adjustment to the global market to avoid huge losses. Everyone in the developed world has made adjustments while we’ve sat idle.”
He also said the government would continue subsidies for diesel in the agriculture sector.
Most of the fuel oil imported by Bangladesh is used in the transport sector. Nasrul said a price hike would not affect the costs in the sector much.
Bus fare may increase by Tk 1 or 2 per kilometre after the fuel price rise, according to him.
He said they were thinking about discussing the issue with road and water transport authorities, and transport owners.
The state minister said the government took steps to increase energy imports besides its efforts to raise production.
“We will sign long-term deals for gas imports. We will hold talks with those who have offered to sell to us. We will also talk to those, including Qatar, who haven’t sent a proposal to us.
“We will also task Bapex and the foreign with digging wells for gas through tender.”