Bangladesh on Sunday raised all fuel prices by up to 19 percent, a senior energy official said. "The state-run oil importing and distributing firm was incurring huge losses and the government has to take this decision," said Afrazur Rahman, the spokesman of the ministry of power, energy and mineral resources. He told Reuters the move would be effective midnight Sunday.
He said the price of kerosene and diesel was raised to 51 taka from 46, petroleum to 81 taka from 76 and octane to 84 taka from 79 Per litre. Furnace oil was increased to 50 taka from 42 per litre.
Bangladesh last increased oil prices in May this year. Finance Minister Abul Maal Abdul Muhith on Saturday told Reuters in an interview that Bangladesh would increase imported fuel prices to reduce losses incurred by the state-run Bangladesh Petroleum Corporation and to rein in an expanding balance of payments deficit. "We have no alternative but to raise fuel prices to ease pressure on hard-earned foreign exchange reserves and stop further expansion of the balance of payments deficit (BOP)," the minister told Reuters in an interview before leaving for meetings in Washington with the World Bank and the International Monetary Fund (IMF). An IMF mission, led by David Cowen of its Asia and Pacific department, visited Bangladesh last week.
It asked Bangladesh, at a meeting with Muhith, to adjust oil prices in line with rising international markets. The BOP swung into a deficit of $635 million in the fiscal year to June, compared with a surplus of $2.87 billion a year earlier, central bank officials said.
Bangladesh will have to spend $6.17 billion on importing oil in the 2011/12 fiscal year, more than double the previous year, as it buys more fuel at higher cost to fire up new power plants aimed at easing electricity shortages.
Muhith said fuel imports, mainly furnace oil, would increase mainly due to the setting up of about 30 oil-operated power plants.
He said that in the last two and half years, the oil price has nearly tripled in international markets. In December 2008, oil was $34 a barrel, but now it is between $103 and $104.
"If we do not adjust oil prices, the subsidy may be more than $2.1 billion for fuel import alone in this fiscal year," the minister said.
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