Amid soaring prices of coal in the local market, the Bangladesh Trade and Tariff Commission (BTTC) has found no reason behind such a price movement and recommended taking necessary measures to rein in the prices of the fuel.
The BTTC conducted a study to identify the possible reasons and submitted a report on its findings and recommendation to the Ministry of Commerce (MoC) recently, following a plea by the local brick manufacturers.
The report was prepared based on an analysis of three months of relevant statistics like international prices, prices quoted in the letters of credit (LCs), local import value, and exchange rates of US dollar to foot coal import bills.
The prices of coal went up by 21 per cent in the local market in the last three months and it spills over into the brick manufacturing sector as the cost of brick production surges by Tk 12 per piece. Coal is the key fuel for brick manufacturing.
Industry insiders expressed their concern over the rise in the key construction material that they apprehended to push up development expenditure too.
In its report to the MoC, the BTTC recommended the government to take necessary measures to rein in the price manipulation in the local market, if any, as it found no reason behind the increase in the coal prices after September, 2022.
Prepared by Deputy Chief of the Commission Md Mahmudul Hassan, the report, however, projected that the coal prices would start declining by the end of this month.
The local price of coal was Tk 22,000-24,000 per tonne in September last, but went up to Tk 27,000-29,000 in October, Tk 30,000-32,000 in November, Tk 28,000-Tk 30,000 in December, the report pointed out, quoting data from the brick manufacturing association.
However, average coal import value declined to $150.45 per tonne in November last from $ 206 in July 2022.
In the report, the BTTC recommended reviewing the international and local prices of coal every three months to make adjustments of its prices as coal is categorised as an essential product as per "The Control of Essential Commodities Act-1956".
The BTTC also suggested imposing specific VAT instead of ad valorem VAT on import of coal, an alternative source of energy.
Earlier, the Bangladesh Brick Manufacturing Association sought intervention of the commerce minister to keep the local coal market stable.
Bangladesh meets most part of its coal demand through imports from Indonesia.
The low-calorific Indonesian coal (4,200kcal/kg GAR) shows that the price of low-standard coal was higher during the period from September 04 to December 04, 2021 than that of the same period this year. The average coal import value was US$206 per tonne in July 2022, which gradually declined by 26 per cent to $150.45 per tonne in November 2022, the report said.
Analysing the average LC value of the last three months, the BTTC found the value of coal declined in November last though it was higher in October compared to that of September 2022.
Average L/C values per tonne of coal were $129.77, $164.67 and $116.29 in the months of September, October and November respectively. Currently, the import of coal is subject to pay a 15 per cent Value Added Tax (VAT), apart from 5.0 per cent Advance Tax (AT) and 5.0 per cent Advance Income Tax (AIT).
Talking to the FE on Monday, Md Asadur Rahman, Secretary General of Bangladesh Brick Manufacturing Owners Association, said the coal importers earlier sold per tonne of coal at Tk 22,000 after importing at a price of $200, but this year they were selling the same at Tk 31,000 after importing it at $148 per tonne. The importers are charging much higher prices than that of their import prices and making windfall profits, he alleged.
"We need six to seven tonnes of coal per day to run the brick fields," he added.
Currently, there are around 8,000 brick fields that need coal as fuel to manufacture the key construction item. Mr Asaduzzaman said the MoC recently held meetings with the importers and brick manufacturers to settle the issue.
