Because the global oil market has remained stable despite the unrest in Iraq and Syria, the government has no immediate plan to hike the price of fuel oil, Finance Minister AMA Muhith has said.
“We have decided to procure more than 1.6m tonnes of fuel oil from seven countries. The Cabinet Committee on Public Purchase has approved that decision,” he told reporters after a meeting of the committee yesterday.
In reply to question, the minister said although the International Monetary Fund (IMF) had recommended increasing the price of fuel oil, there would be no hike in price for the time being.
“Price of fuel oil in the local market will be adjusted in accordance with the scenario in the global market. We are also planning to introduce an ‘automatic price adjustment mechanism’ in a very short time,” he said.
The cabinet committee meeting, presided over by the finance minister, yesterday approved eight separate proposals from the Energy Ministry to purchase 1.62m tonnes of fuel oil at a price of Tk11,098 crore for the July-December period.
As per the proposal, Bangladesh Petroleum Corporation (BPC) will import the oil from eight state-run companies in China, Malaysia, the Philippines, Vietnam, Indonesia, United Arab Emirates and Kuwait to meet the rising demand of diesel- and furnace oil-based rental power plants during the period.
BPC Chairman Md Eunusur Rahman said: “It is a good thing for us that the prices of diesel, furnace oil and jet fuel have not increased despite the tension and unrest in Iraq and the Middle East. This means that the government will not have to spend additional foreign currency for importing fuel oil.”
Officials said the total demand for fuel oil over the next six months would be around 25m-26m tonnes, going up to about 50m-52m tonnes by the end of the year.
The demand for diesel was likely to decline over the period because of an adequate generation of electricity across the country, said a senior official of the government’s Energy Division.
For the next six months, the projected demand for diesel is 1.74m tonnes and furnace oil 520,000. During the same period last year, demand for diesel was 1.8m tonnes.
The Eastern Refinery Limited in Chittagong will refine 180,000 tonnes each of crude diesel and furnace oil.
In the proposal, the premium for furnace oil is set at $34 per barrel; during the first six months of this year, the premium was $35 per barrel. The premiums for jet fuel and kerosene will remain at the existing $5.80 per barrel.
In January 2013, the government increased the prices of diesel and kerosene by Tk7 and those of octane and petrol by Tk5 per litre. The immediate past Awami League government hiked the prices fuel oil five times after 2011.
IMF has always been pushing the Bangladesh government to adjust the prices of petroleum fuel in line with the trends in the international market. The global lender wants Bangladesh to reduce subsidy in the sector by hiking the price of fuel and power.
