Local airlines, including the state-owned Biman, are facing a severe blow and losing their competitiveness globally due to exorbitant price of jet A-1 fuel, fixed by Padma Oil Company Limited, a subsidiary of BPC.
Airlines sources said on many occasions they refuel their planes from Kolkata due to low price of jet fuel there compared to Dhaka.
Bangladesh Petroleum Corporation (BPC), however, ruled out the allegations made by different airlines, and claimed that they are keeping the jet fuel price equivalent to that of Kolkata.
Energy experts, meanwhile, smelt a rat and opined that some vested quarters were working in the government organisations as agents of the foreign airlines for destroying the local airlines industry.
Seeking anonymity, a top official of Biman Bangladesh Airlines said the price of one litre of jet A-1 fuel in Dhaka was US$ 0.59 in July 2017. It reached $ 0.70 on February 13, after the authority concerned increased the price on four occasions.
On the other hand, the price of same jet fuel in Kolkata was $ 0.55 and in Kuala Lumpur $ 0.52 at the same time.
He said one cent increase in the fuel price raises overall airline operation cost by Tk 60 million. It means, the operation cost of Biman has increased Tk 660 million due to the 11-cent increase in jet fuel price over the past six months. The national flag carrier has to spend an additional Tk 3-4 billion annually.
Aviation experts said fuel cost constitutes 33 per cent of the total expenditure of airlines operation. If fuel cost increases, the operation cost rises, directly affecting the company's profitability and sustainability.
Besides, there is no scope of increasing ticket prices while competing with other airlines of Middle East and South Asia. In this context, there is no alternative but to sell jet fuel at a logical price for ensuring sustainability and development of the Bangladeshi airlines.
Biman general manager (public relations) Shakil Meraj said it is a big challenge for Biman to stay in the competition with other foreign airlines because of the high jet fuel price.
Biman is trying to enhance its efficiency in other areas to offset the loss, incurred due to the over rated fuel price, to ensure quality passenger services and profitability of the company, he added.
US-Bangla Airlines general manager (marketing support and PR) Kamrul Islam told the FE that the situation has aggravated, as Padma Oil has a monopoly in the jet fuel business in Bangladesh.
As the jet fuel cost is rising, their operation cost is also becoming higher. Ultimately it is affecting the passengers, as they have to pay extra price for tickets.
There is an allegation that BPC never lowers the fuel price despite its price fall in the international market to recoup previous loss. But the organisation always increases the fuel price, showing excuse of price hike in the international market.
There is a law that BPC cannot fix the fuel price arbitrarily, but it is never followed. The organisation fixes fuel price and increases it, violating the articles 34 and 22 (kha) of Bangladesh Energy Regulatory Commission (BERC) Act.
When contacted, BPC chairman Abu Hena Md Rahmatul Muneem told the FE that the law has not been implemented yet. BPC revises the jet fuel price monthly in line with its price in the international market.
He claimed that Biman's allegation of high fuel price is baseless, and the price of jet fuel price is almost the same in Dhaka and Kolkata.
"If our fuel price is so much higher than other countries, how can we sell fuel?"
But the BPC chairman said the corporation will make the jet fuel price equivalent to that of Kolkata to avoid this allegation.
Energy expert Professor Shamsul Alam said it is the legal authority of BERC to fix jet fuel price. BPC has no authority to set the price according to its desire. But Ministry of Finance also has a role here.
The jet fuel price has been increased to destroy local aviation sector, so that it cannot sustain in the competition with the foreign airlines.
The local railway has been destroyed for the interest of the private bus services, and Bangladesh Road Transport Corporation (BRTC) has been destroyed for the interest of the private bus owners. Same conspiracy has started to wipe out the airlines industry here, Mr Alam also noted.
"We see it as a conspiracy to establish the market of the foreign airlines by a vested interest group within the government, which is against public interest. We have already applied to the High Court to delegate the authority of fixing all fuel prices to BERC," he added.
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