Reinstate Previous Prices of Fuel Immediately: CPD

In view of recovery from the adverse impacts of COVID-19, Centre for Policy Dialogue (CPD) has recommended reinstating the earlier prices of diesel and kerosene at an immediate basis.

The think tank in a media briefing said the price hikes of diesel and kerosene will have both immediate and medium-term impacts on various sectors of the economy.

The Centre for Policy Dialogue (CPD) under its flagship programme, Independent Review of Bangladesh’s Development (IRBD), organised the programme on ‘Fuel Price Hike: How Necessary Was It?’ at CPD’s dialogue room on Wednesday.

The fuel price hike implies that there will be an increase in transportation cost, agricultural cost and electricity cost. Thus, all production cost will increase leading to cost of living to shoot up and end consumer will suffer, according to CPD.

The accumulated profits of Bangladesh Petroleum Corporation (BPC) should be enough to provide some cushion despite the previously accrued losses, CPD suggested, adding that, the government can keep the prices at their previous levels through subsidies or tax and tariff cuts.

Stating that forecasts by multilateral agencies (e.g., World Bank) predict a downward movement of fuel prices in 2022, CPD members said absorbing the price shock and focusing on recovery should be the government’s prime concern at this point in time.

Dr Fahmida Khatun, Executive Director, CPD made the keynote presentation at the media briefing.

On 3 November, Bangladesh Petroleum Corporation (BPC) raised the prices of diesel and kerosene at the retail level – to be effective from zero hours on 4 November 2021.

The prices of diesel and kerosene have been increased to Tk80 per litre from Tk65 per litre indicating a 23.1% rise. The price of furnace oil has also been raised to Tk62 per litre from Tk59 per litre marking a 5.1% increase.

Amid the surging global energy prices, this decision came in order to recover the apparent losses incurred by the state-owned BPC, which is the monopoly of the market.

The price hikes of diesel and kerosene came at a time when prices for daily necessities were already exhibiting an upward trend. Compared to the corresponding period of FY21, prices of several commodities shot up in November 2021 (based on TCB data).

The inflation data provided by Bangladesh Bureau of Statistics (BBS) only shows marginal increase in point-to-point basis and declining trend in moving average basis (up to September 2021). This appears to be quite detached from the actual scenario on the ground and raises questions regarding the reliability of inflation data, CPD stated.

Professor Mustafizur Rahman, Distinguished Fellow; Dr Khondaker Golam Moazzem, Research Director of CPD; Towfiqul Islam Khan, Senior Research Fellow, CPD and Muntaseer Kamal, Senior Research Associate of CPD were also present at the briefing.