The Center for Policy Dialogue (CPD) has recommended adopting a market-based pricing mechanism, including an Artificial Neural Network (ANN)-based model, to reduce fuel prices in Bangladesh by Tk10-15 per litre.
The proposal was presented at a dialogue titled "Market-based Energy Prices: Government-led Initiatives and Possible Revisions" held in Dhaka on Thursday.
The ANN-based pricing model aims to enhance transparency, stabilize prices, and align them with international market trends while considering local socio-economic realities.
CPD emphasized the model’s potential to reduce consumer costs and provide better predictive power for future fuel pricing adjustments.
CPD underscored the need for the Bangladesh Energy Regulatory Commission (BERC) to take full charge of fuel pricing.
This includes holding public hearings to gather consumer feedback and ensuring pricing policies reflect competitive rates within the purchasing power of consumers.
The CPD recommended that the Ministry of Power, Energy, and Mineral Resources immediately approve BERC’s draft regulation on fuel pricing to institutionalize this process.
CPD pointed out that since 2015, the Bangladesh Petroleum Corporation (BPC) has been making profits without receiving subsidies.
However, the lack of a clear legal or methodological framework for determining fuel prices has led to consumer dissatisfaction.
The think tank said that price increases due to exchange rate fluctuations or other factors should be adjusted over time to protect consumer interests.
BPC Chairman Md Amin Ul Ahsan highlighted potential reductions in import costs for fuel oil from January to June 2024.
However, challenges such as limited storage capacity and increased expenses due to exchange rate volatility need to be addressed.
Ahsan said that ongoing efforts to enhance storage infrastructure could mitigate these issues in the long term.
CPD Research Director Dr Khandaker Golam Moazzem expressed concern over rising subsidies in the power sector, which have escalated from Tk4,000 crore in 2017 to an estimated Tk32,000 crore by the end of 2024.
He projected that this could reach Tk40,000 crore in 2025, calling for reforms to align Bangladesh’s electricity and fuel prices with international practices.
Moazzem criticized uniform price hikes for gas across all consumer levels and emphasized the need for adjustments reflecting international norms.
CAB's Energy Adviser, Dr M Shamsul Alam, echoed these concerns, questioning whether the government prioritizes consumer interests in its pricing policies.
