Diesel and kerosene are 23 per cent costlier at Tk 80 per litre from Thursday as the government moved to hike their prices on the plea to recover the losses of the state-run Bangladesh Petroleum Corporation (BPC) from surging global energy prices. In the July-September period, the average price of oil shot up about 71 per cent to $73 per barrel and then in October, it hit $83.7 a barrel. Meanwhile, a high inflation rate has flattened lower and middle-income groups and is now putting fixed income groups in the puzzle. More and more people will go under the poverty line in terms of the multi-poverty index. Considering the current purchase price, the BPC is losing about Tk 20 crore per day: it is selling each litre of diesel at Tk 13.01 lower than the purchase price and furnace oil Tk 6.21 less. In October, the BPC logged losses of Tk 726.7 crore. The government agency has been racking up losses of about Tk 20 crore a day.
Bangladesh consumes 40 lakh tonnes of diesel — 72 percent of which is by the transport sector and 20 per cent by farmers during the boro paddy season — and about 1 lakh tonnes of kerosene is used mainly for cooking, lighting and as aviation fuel. In September, inflation rose for the third consecutive month to 5.59 percent. The ultimate effect of the increased prices of kerosene and diesel will fall on the users of public transports and in turn on consumer items they carry. This will stoke inflation further and increase the cost of living, which is not desirable at this time. Besides, the government did not bring down the prices of petroleum locally after oil prices plunged internationally for the pandemic.
The macroeconomic situation is deteriorating day by day due to long sluggishness in foreign direct investment and corruption that, with income loss due to Covid, has devastated the fixed income group. The government should subsidise fuel prices as stability in fuel price would stabilise all other sectors. If the fuel price becomes volatile it would cause chain reactions and impact in all sections.
