Fuel price hike in the global reality

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       Mehjabin Bhanu

After 12 midnight on Friday, the price of fuel oil increased a lot. In this situation, a kind of anarchic situation has been created in the country’s public transport since morning. The number of vehicles traveling between Dhaka and other districts of the country has decreased a lot, and the number of city transport buses has also decreased. And apart from this, bus drivers and conductors have started grumbling with passengers at different places. Each transport has its own set of fares, and this is where all the trouble begins.

Fuel price hike and some facts

After the government had hinted that the price of fuel would increase for some time, it finally increased at an unexpected rate last night. This price increase is making the people of the country think again. On the one hand, as the price of all import-dependent products was increasing due to the increase in the dollar rate at a reckless pace for some time, the price of domestically produced products was also increasing. All in all, at the end of the month, the lives of fixed income earners and those dependent on daily income were in dire straits.

In this situation, the price of fuel oil is going to increase and due to this increase, the cost of living will increase a little more, it cannot be said that people were not mentally prepared for this. But there has never been such an increase in one leap. It is true that the price of crude oil was 80 dollars per barrel in the international market a few days before the Russia-Ukraine war last February. Earlier, in November last year, the price of diesel and kerosene was increased by one step from Tk 65 to Tk 80. This time during Corona was very difficult for the government. Earlier, Bangladesh Petroleum Corporation (BPC) earned around Tk 50000 crore in this sector in the last seven years due to the low price of fuel oil in the world market, but the government had to count Tk 23000 crore in losses in one year during the Corona period. This price increase in November last year was adjusted to the selling price of oil in the international market with the selling price of the country.

Among them, the government faced huge losses after the fall in global oil supply after the Russia-Ukraine war last February. In addition to disrupting the normal pace of global imports and exports, remittances continue to decline, putting pressure on our reserves. In this situation, the government sees no alternative but to reduce the level of losses in order to keep the domestic economy stable.

We need to know that the government gives subsidies not only for fuel but also for other sectors of public interest. Notable among which is the food sector, where 6 thousand 745 crores have been allocated in the budget for the current financial year. Apart from this, there is assistance under various social safety nets for the agricultural sector and rural communities. Now, if these special allocations are to be maintained, it is natural to intersect some areas of public interest. Most importantly, the global political and economic situation is grinding at the moment.

Normally whenever the price of fuel is increased, there is an uproar about it, and this time the situation is completely different. This is because there has never been such a price hike in the past. The price of diesel and kerosene has increased by Rs 80 to Rs 114. In this case, the rate of increase is about 42 percent, and the price of petrol and octane has increased from Tk 86 and Tk 89 to Tk 130 and Tk 135 respectively. In this case, this increase is more than 50 percent.

As it is said before, the price of oil will rise – it has been heard for a long time, and the rise is normal. Our neighbor India has been selling diesel, petrol and octane at Rs 30 to 35 more than ours for several months. Also, our oil sales were suddenly increasing for a few days, from which it was assumed that quite a large amount of oil might be being smuggled into India every day, which was increasing the level of losses of the government. Considering this aspect, it was necessary to adjust this price. The fuel prices in Bangladesh were same to India while it was lower than prices in many other neighbouring countries.

The government has given Taka 53,000 crore or six billion dollars subsidy to energy and power sectors in last year. The neighbouring countries didn’t give such subsidy and the prices of energy have increased many days ago. The prices of fuel were higher than us. The price of diesel is Taka 114 and price of octane is Taka 134 to Taka 135 in India from many days ago. A lot of fuel was being smuggled through border due to low price in our country, the price of fuel in Bangladesh was Taka 114 per litter while it (price) was Taka 114 in Kolkata and Taka 112 in all over India, Taka 118 in China, Taka 123 in United of Emirates, Taka 127.82 in Nepal, Taka 138.24 in Indonesia, Taka 189.78 in Singapore and Taka 260.75 in Hong Kong. And the prices of fuel are lower than many other neighbouring countries and equal to India.

However, in this case, the government should have made a plan in advance about how much the price will increase and how much additional fare the passengers will have to pay for the transport service, which was never done in the past. And for this reason, we see that the conflict between the transport owners and labor unions with the passengers has become a normal issue. As a result, there were transport strikes and at one point the government and the common man were held hostage by higher fare hikes. Earlier, when diesel prices were hiked by Rs 15 per liter in November last year, transport fares were increased by 27 per cent, more than the percentage increase in oil prices. In this experience, the issue of rent should have been discussed in advance with the government by workers’ and owners’ organizations.

The rise in oil prices will undoubtedly have many negative effects on people’s lives. Since we are not out of the recession that is going on in the global economy, it can be assumed that if this recession is removed, our economy will also speed up. But this time is difficult to pass. The government has sought a loan from the International Monetary Fund (IMF) to make it somewhat bearable. The IMF pressures each country’s government to coordinate subsidies in various sectors as a precondition for granting these loans. In this case, we have also been asked to know the subsidy amount of various sectors and we have been urged to reduce this subsidy amount. How strategic the government is in providing more money to the country’s economy at the moment and dealing with efficiency and constraints in the financial sectors is an important issue.

The price of oil has increased, while the price of water and gas has also been increased. It is known that the price of electricity will increase soon. People will suffer, but the government has also recently taken various initiatives to cut costs. We need everyone’s cooperation to fight this crisis. It is not that this price increase has happened only in Bangladesh. However, as in many countries of the world, even in our neighboring countries India, Afghanistan, the price of fuel oil is constantly adjusted in the daily pricing method, if it is possible to do this in our case, then the customers will not have to suffer from such a jump in the price increase, and the government will not have to bear the burden of huge losses. Do not book often. Since the government’s losses will be almost zero with the current price hike, now is the right time to switch to the daily pricing method. And through this, as the price increase will be bearable, the immediate benefit of the price reduction will also have a positive effect on the consumer level.

The writer is a school teacher in Bangladesh

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