Imbroglio over oil price hike

The short-lived relief on account of reduced price of bottled soybean oil at Tk 163 from the previous Tk 173 per litre enjoyed by the common consumers for the last two months is over. Vegetable oil refiners have decided to return to the pre-VAT-reduction price regime. Notably, the government, through a notification by the National Board of Revenue (NBR) on February 7, reduced VAT on the import of soybean and palm oils from 15 per cent to 10 per cent and withdrew indirect tax at the production and trading stage of the oils. Those measures remained effective until April 15, according to the NBR notification. Understandably, the measure aimed to rein in the price hike of edible oils along with that of other essential commodities before and during the holy month of Ramadan. Now that the tenure of VAT reduction and indirect tax waiver has expired, the oil refiners in a letter to the commerce ministry have argued in favour of unilaterally re-fixing prices of oils at the pre-existing level at Tk 173 for each litre of bottled soybean oil from April 16. Similarly, loose palm oil, the price of which was not fixed earlier due to its price fluctuation in the international market, would now be set at Tk 132 per litre.

Ironically, the refiners have proposed increasing oil price immediately upon expiry of NBR notification, though they got a respite of 15 days before they could reduce oil price in response to the lowered VAT regime. The question is: why are the refiners in such a hurry to increase edible oil price and could not wait to discuss the matter with the government before taking such a rash decision?  Worse still, the refiners and vegetable oil manufacturers' decision to raise oil price came at a time when in the international market, price of crude soybean oil per metric tonne has reportedly declined by more than 34.7 per cent during this March-April period. Clearly, it is their known tactic of using any excuse for hiking prices of their products.

Going by what the state minister for commerce reportedly told the press the very next day following the edible oil traders' move, the government is seemingly not seeing eye to eye with the refiners. It rather stressed effecting any fresh fixation of edible oil price through the Tariff Commission and then the NBR would be informed of it. The Tariff Commission has found the traders' proposal to hike edible oil prices unjustified. In the latest development, the government has fixed the price of bottled soybean oil at Tk 167 a litre and loose soybean oil at Tk 147 a litre.

 If previous experience on the matter of any face-off between the government and oil refiners, or, for that matter, any other essential commodity cartel is any guide, one wonders how far the former would be able to remain in its present position of ignoring the refiners' letter. Clearly, the refiners appear so self-assured that they think they can set oil price as they deem fit. This is unacceptable. There is law to govern any economy, even a free market one, when necessary. Big corporate giants are also not given any quarter when they fall afoul of government guidelines even in the most advanced free market economies. In fact, what is going on in the name of essential commodities' trade in Bangladesh is better called a 'free-for-all' and not a free market economy. The government must put its foot down before it is too late.