Think tank Centre for Policy Dialogue (CPD) has suggested the government should reverse its abrupt price hike of diesel and kerosene to help the economic recovery process amid the ongoing pandemic. Media reports on Thursday said that CPD termed the increase of the petroleum products as a lack of political foresight behind the government. The price hike will have a double-edged adverse effect on people as consumers and businesses as producers-suppliers. On top, such hikes at a juncture predominated by recession at home and abroad will have both immediate and medium-term impacts on various sectors of the economy. In an in-depth analysis, the CPD at a media briefing on Wednesday mentioned that the government is saving money from one place but its impact will be everywhere. To cover up the losses of the state-run Bangladesh Petroleum Corporation (BPC) from the surging global energy prices, the government last week increased the prices of fuel oil by 23 per cent, the biggest jump in a decade. The move prompted the mass transport operators to go on an indefinite strike causing great sufferings to the common people and bringing the conveyance of goods to a standstill. To appease the operators, the government hiked bus, launch and truck fare by 28-35 per cent after three days.
According to CPD’s calculations, if the global oil price continues to escalate, the government would need Tk 20 crore per day and Tk 7,200 crore a year to offset the maximum amount of loss. However, it will generate additional revenue of Tk 7,838 crore from the BPC in the form of import duty and value-added tax. So, the government could have temporarily withdrawn the import duty and VAT to adjust the losses. The BPC had logged in profits of Tk 43,136 crore between fiscal 2014-15 and 2020-21. The present hike has led to an increase in the transportation cost and will add to agricultural cost and electricity cost. Thus, all production costs will increase leading to a spiralling of the cost of living.
The think-tank pointed out that the BPC has been weakened financially due to mobilisation of funds amounting to Tk 10,000 crore from the state-owned oil importing and marketing organisation. Earlier, the government had amended a law in parliament to mobilise surplus money from the state-owned enterprises, especially from the energy-related companies. We too believe if the government waives import duty and VAT, the raise in fuel price can be reversed. Because of the spiralling effect of fuel price hike economic recovery in the wake of the Covid-19 slow-down will suffer. The people will be the ultimate sufferers.
