As feared, the Bangladesh Petroleum of Corporation (BPC), the state-owned agency that enjoys monopoly in the marketing of petroleum products, has come up with a proposal to hike prices of fuel oils in the domestic market.
The BPC has cited the uptrend in prices of fuel oils in the international market since November last as the reason for proposing a fresh hike in domestic petroleum products' prices.
The corporation had been earning hefty profit since later part of 2014. It repaid all its dues to banks and tax authorities in recent years. Prior to 2014, it used to incur huge losses on account of oil marketing. The reversal in international oil prices since November last has again put the corporation in losing streak.
Whether the government would finally approve the BPC proposal or not remains to be seen. This is election year and the people would, naturally, not like any hike in oil or gas prices. The government increased gas tariff on a number of occasions in recent years, but except for a nominal cut it had ignored the popular demand for lowering the fuel oil prices in line with international prices.
Moreover, the issue of inflation is tagged with hike in fuel oil prices. The economy has been experiencing an inflationary pressure for the past few months. It was mostly because of high prices of a few essential food items. But, of late, some other factors are stoking up inflation. Depreciation of taka against the greenback is one of those. Any hike in fuel prices would be yet another addition. So, the government has to think about the issue very carefully prior to taking any decision.
The government in the past, while raising fuel oil prices, used to present an estimate about the 'huge' subsidy it was providing to fuel oils for the benefit of the consumers. But a substantial part of the total volume of subsidy has been recouped by it since 2014 by keeping the prices of petroleum products at much higher level as against international prices. So, the government, in fact, has not done any favour to the consumers.
It is natural that no business entity, public or private, would like to suffer losses. But its price fixation has to be logical and on fair grounds.
Many domestic and international organisations have time and again asked the government to put in place a market-based mechanism for fuel oil prices, meaning that the prices of fuel oils would be adjusted automatically with the changes in their international prices. But the government did not pay heed to any such plea. Had it been done so, there would not have been that much grumbling.
Besides, such a mechanism would not have prevented the government from helping certain sections of consumers by providing subsidy.
The issue of fuel price might prove to be a dilemma for the government. It cannot annoy the electorates by raising fuel oil prices during this sensitive time. Nor can it afford huge subsidy on account of fuel oil marketing because of resource crunch. The government is facing an uphill task in meeting its revenue target set for the current financial year.
