The government should reverse the decision made by the Finance Division to sanction a further Tk600cr in fuel oil subsidies to the Bangladesh Petroleum Corporation (BPC).
Fuel subsidies are a costly burden on the taxpayer which should be progressively eliminated. This is necessary to stop unnecessary waste and to incentivise investment in cleaner, renewable forms of energy.
It is concerning that the government is proceeding with past policy to keep topping up the state-owned BPC with subsidies simply because funds have been allocated in the FY2014-15 budget.
This is especially so because BPC reportedly failed to explain to the Finance Division how it spent two previous subsidy installments of Tk2,031cr, provided from October 2013 until June this year.
Moreover, the state-owned company also failed to get its accounts audited by September this year, as was agreed with the IMF as one of the conditions for the multilateral funder releasing the 5th tranche of its $140m loan under the Extended Credit Facility.
The BPC chairman has discussed how the new tranche of money will be used and stated that BPC has begun the process of finding an international auditor but this has proved “time consuming.”
This state of affairs does not provide much confidence that monies borrowed for subsidies have been spent in the most efficient manner possible.
It would be far better not to allocate fuel oil subsidy this fiscal year and to allow the price of fuel oil to adjust in line with international market rates. This would both discourage waste and free taxpayer funds to be spent more productively.