The BPC's move to hike fuel oil prices

To make the situation more difficult for the poor consumers, the government might soon make the fuel oil prices costlier in line with their international prices. The state-run Bangladesh Petroleum Corporation (BPC) is, reportedly, readying proposals to this effect to submit to its controlling ministry---Ministry of Power, Energy and Mineral Resources. Fuel oil prices in the international market have surged to seven years high as the world economy is now amid a recovery process. Another reason for the price surge has been the supply restrictions maintained by the oil-exporting countries.

Finance Minister AFM Mustafa Kamal also expressed his concern the other day over the mounting oil prices. The supply shortage of fossil fuels has been hurting many developed economies, including some important destinations of Bangladesh exports. With the pandemic receding, governments stimulated their economies to make up for their losses. But the supply chains have failed to cope with the surge in consumers' demand, making the recovery process highly unstable. The supply problem is not with just fuel oils. It covers many more items, both primary and manufactured. The short supply has again led to the rise in the prices of most products.

The forecast is that the oil prices would go further up. BPC, according to a report published in this paper, is now incurring losses at around Tk 200 million per day on account of the sale of diesel and furnace oil. It, however, had earned a hefty profit during the past several years when oil prices were at their lows. The windfall gain came for the corporation during the pandemic-hit 2020 when oil prices hit the rock bottom---below US$20 a barrel. 

Under the circumstances, the government might feel tempted to hike fuel oil prices, for it can hardly afford a further hike in subsidy amount kept aside in the budget for the current financial year. Besides, the increase in the price of diesel, in particular, has become imperative because of the wide gap between the price of diesel in Bangladesh and  that in  neighbouring India. Since the item is much cheaper in Bangladesh, the possibility of its smuggling to India is there.

But any hike in fuel oil rates would make the prevailing price situation in the country worse. People are having a tough time because of an unabated rise in the prices of most essentials. The pandemic-related disruptions hit poor and low-income people hard. The soaring prices of essential commodities in recent days have only deepened their sufferings. The cascading effects of the fuel price hike on the overall price situation and transportation costs would only exacerbate the same.

All would expect the government to exercise prudence while deciding on the fuel oil prices. Understandably, the overall situation is not that palatable. Yet, it cannot overlook the interests of the poor and low-income people. Before taking any decision, the relevant agencies should refer the price-hike proposals to the Bangladesh Energy Regulatory Commission (BERC) for necessary actions. That would make things more acceptable.