In April last, the government cut the prices of octane and petrol by Tk 10 a litre and diesel and kerosene by Tk 3, with the intention of passing on the benefits of low prices in the international market to consumers. But the government drew criticism as the reduction in fuel oil prices left no impact on local market as well as on the cost of living as it did not lower the transport fares or electricity prices. The historic drop in oil prices did not bring any blessing for the people of Bangladesh. If the prices were cut significantly, it would have positive impact on inflation as well as reduced transport costs would be a blessing for the people.
The most direct benefit of a significant cut would have gone to farmers who use diesel run pumps to irrigate their crops as well as power plants. The government is losing a golden opportunity by not bringing in necessary policy reforms in the power sector and linking the local market with the international market. The government set the current prices when the oil price was above $100 a barrel. Although the price is showing upward trends it is unlikely that it would go over $60 a barrel very soon.
India, Sri Lanka and Pakistan have adjusted their prices constantly to reflect the global market, but Bangladesh does not. Despite the April cuts, Bangladesh Petroleum Corporation still makes a profit of Tk 23 to Tk 28 per litre of petrol and octane and about Tk 16 for diesel and kerosene. The BPC started to make profits in 2015, which came after 14 years of continuing losses. The state-run agency made a profit of Tk 4,126 crore in 2014-15. The profits rose to about Tk 7,500 crore in 2015-16.
We hope the government will slash the oil price to meet the people’s demand and make a policy to adjust oil prices with global prices constantly. The people have all rights to get the blessing of cheap oil prices and the government should entertain this.
