Anindya Islam Amit, state minister for power, energy and mineral resources, has set out the reasons behind the rise in fuel oil prices. In his account, a risk had arisen of fuel oil imported with foreign currency being smuggled to neighbouring countries. At the same time, Bangladesh Petroleum Corporation (BPC) had fallen into heavy losses because prices had not been adjusted for a long period.
The state minister made the remarks at a press briefing at the Secretariat on Monday. He said that although the decision was unpopular because of the global situation, the government had had to take it. The new prices took effect from the first hour of September 21.
The state minister said: “Fuel oil prices were lowest in Bangladesh among the countries of South Asia. That created the prospect of fuel oil bought with the hard-earned foreign currency of expatriates being smuggled to neighbouring countries.”
He added: “We faced the risk of fuel oil bought with the hard-earned foreign currency of our expatriate brothers, which is the principal source of our reserves, being smuggled to neighbouring states. In that situation the government has had to make this price adjustment in order to continue its social protection programmes and to stop smuggling.”
Anindya Islam Amit also said that continuing large subsidies in the energy sector could have obstructed the government’s social safety net programmes for low-income and marginal people. In his view there was a risk of serious disruption to programmes such as widows’ and disability allowances.
Setting out BPC’s losses, the state minister said: “In the six months from March to August, BPC lost 22,875 crore taka because fuel oil prices were not adjusted. That is an average loss of 3,813 crore taka a month for the corporation over that period.”
He said Bangladesh has to import about 7 million tonnes of fuel oil a year, of which diesel accounts for about 4.5 million tonnes. Before the price adjustment there was a loss of about 90 taka on every litre of diesel. Even after the new prices take effect, BPC will have to subsidise about 70 taka a litre on average.
Anindya Islam Amit said: “If fuel oil prices had not been adjusted, the government would have had to give a subsidy of about 40,000 crore taka a year on diesel alone. Taking all kinds of fuel together, the annual loss would have reached about 50,000 crore taka.”
The state minister also said the government had no alternative to adjusting prices, with fuel oil prices rising on the international market and insurance premiums and shipping charges increasing. At the briefing he also set out the then market rates for diesel in neighbouring and regional countries.
The state minister said Prime Minister Tarique Rahman has instructed the relevant offices to keep the effect on ordinary people to a minimum now that the new prices have taken effect.
Anindya Islam Amit said: “Taking a decision like this is extremely difficult. I came into politics with the intention of easing the hardship in people’s lives. As a political worker I feel the hardship this will cause people.”