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State Minister for Power, Energy and Mineral Resources Nasrul Hamid says Bangladesh may have to 'adjust' fuel prices to better reflect the turmoil in the international market as the Ukraine war continues to drive up costs.
"The price of fuel in the global market has been climbing for the last six or seven months. The oil we used to buy for around $70-71 a barrel now costs $171 and it's only rising," he said in an audio message to the media on Thursday.
While the government has been subsidising fuel imports amid the crisis, it must consider adjusting prices at some point, according to Hamid.
"Countries around the world have taken various measures to address the rise in fuel prices. Take neighbouring India, for example, where there is a difference of around Tk 35 to Tk 50 per litre for different types of fuel."
Hamid also touched on the dwindling natural gas supply that forced the government to scale down electricity generation. Around 64 per cent of power plants in Bangladesh run on natural gas, but the reserves will eventually dry up, he warned.
"I've been saying for the last 10 years that our gas supply is declining. But we made adjustments to address any shortages by importing gas from abroad."
Fuel is imported in two ways: one is through long-term contracts and the other is to buy from the spot market, according to Hamid. However, the spot market is now under intense pressure as prices are soaring due to the conflict in Ukraine, particularly as most of Europe's gas supply comes from Russia.
"Almost all European countries are dependent on this gas and as a result, the price of gas has gone up from $4.0 to almost $30 in the spot market."
Even with government subsidies, it may not be possible to meet the spiralling costs while, on the other hand, ordinary people will have to bear a massive burden if the authorities keep raising prices, according to Hamid.
Hamid stressed the need to be frugal in terms of energy consumption under the circumstances and urged the public to be patient.
"This is a temporary situation. We have many power plants. But we had to reduce their output due to the gas shortage. We have prioritised our gas supply for fertiliser plants and other industries. And if everyone is a bit economical with their use of gas, then we can definitely come out of this cycle."