The government’s latest fuel price hike has begun feeding through the economy within days, with bus passengers paying up to Tk100 more and freight operators charging thousands of taka extra even before revised transport fares have been officially finalized.
The September 20 increase of Tk20 per litre across four petroleum products pushed diesel, the lifeblood of road transport, irrigation and much of the country’s goods movement, from Tk115 to Tk135 per litre.
Petrol rose to Tk160, octane to Tk165 and kerosene to Tk155.
But the first shock is already visible beyond filling stations.
Higher charges have appeared at bus terminals and wholesale markets, while calculations by transport operators show the additional diesel bill for a long-distance bus can run into thousands of taka per round trip.
Economists and businesses warn the impact could spread further through food prices, agricultural production and industrial costs at a time when inflation remains above 8%.
At Gabtoli Bus Terminal on Monday, long-distance passengers were being charged Tk50-Tk100 more depending on their destinations, with both air-conditioned and non-AC operators seeking higher fares.
Md Ramzan, a passenger travelling from Kushtia, said he had paid Tk500 to travel to Dhaka the previous day but was charged Tk100 more for the same journey following the fuel price increase.
Bangladesh Bus-Truck Owners Association Chairman GR Shahid said operators would face losses if fares remained unchanged after the diesel price hike, adding that a revised fare chart would be announced soon.
The Bangladesh Road Transport Authority’s committee has proposed increasing long-distance bus fares by 20 poisha per kilometre and city bus fares by 18 poisha per kilometre.
A final decision is expected from the Road Transport and Bridges Ministry.
Tk5,000 more for a round trip
The arithmetic explains why operators are pressing for higher fares.
Transport operators estimate that a typical 45-seat long-distance bus travels around 3.5 kilometres on a litre of diesel.
At the previous Tk115 price, its fuel cost was around Tk32.86 per kilometre.
At Tk135, that rises to Tk38.57, an additional Tk5.71 for every kilometre travelled.
That translates into roughly Tk571 in additional fuel expenditure for every 100 kilometres.
The burden grows sharply on longer routes.
The Gabtoli-Panchagarh distance, for example, is around 438 kilometres, according to Roads and Highways Department data.
A round trip can consume more than 250 litres of diesel.
Even using 250 litres as the benchmark, the Tk20 increase adds around Tk5,000 to the fuel bill for a single round trip.
For a bus carrying about 50 passengers, that alone is equivalent to an additional Tk100 per passenger.
If the bus operates 25 such round trips a month, its additional diesel bill could reach around Tk125,000.
Bus owner Md Kamrul Islam Babul said operators had little room to absorb the increase without adjusting fares.
Bangladesh Road Transport Owners Association Secretary General Md Saiful Alam said transport businesses were already struggling with rising operating costs and called for a mechanism to automatically adjust fares in line with fuel prices.
Freight charges jump by thousands
The repercussions are potentially more significant in goods transport, where higher freight costs can eventually be passed on to consumers.
At Chittagong’s Khatunganj wholesale market, the cost of transporting a truckload of goods from Kushtia has increased from Tk32,000 to Tk40,000, according to warehouse manager Nurul Islam.
Freight charges on different routes have increased by between Tk2,000 and Tk8,000.
Transporting 265 sacks of rice from Kushtia to Dhaka now costs around Tk22,000, up from Tk20,000.
A covered van carrying 10.5 tons of garments from Benapole to Kanchpur is charging around Tk22,000, compared with Tk18,000-Tk19,000 previously.
Truck driver Mohammad Nazmus Zaman said a Satkhira-Chattogram round trip consumes about 230 litres of diesel.
The new price therefore adds approximately Tk4,600 to his fuel bill for each round trip.
Businesses say they cannot absorb such increases indefinitely, raising the prospect that additional freight costs will eventually be incorporated into wholesale and retail prices.
From irrigation to factories
The impact does not end with buses and trucks.
Bangladesh has an estimated 1.3-1.5 million diesel-powered irrigation machines, while agriculture and irrigation account for around 15% of diesel demand, according to government figures cited in the report.
The higher price will therefore raise irrigation costs for diesel-dependent farmers, while factories and businesses relying on diesel generators and machinery will also face higher operating expenses.
Dhaka University Economics Professor Selim Raihan warned that the increase comes after several years of elevated inflation, leaving households with limited capacity to absorb another round of higher costs.
He identified low-income urban households, informal-sector workers and farmers dependent on diesel-powered irrigation as particularly vulnerable.
Raihan said that while higher fuel prices could ease some of the government’s financial burden, the broader effects could include higher inflation, declining purchasing power and greater inequality.
Govt cites Tk70 loss on every litre
State Minister for Power, Energy and Mineral Resources Anindya Islam Amit has said the government had little alternative to adjusting domestic prices because international fuel costs had risen amid the Middle East crisis.
According to the Energy Division, importing a litre of diesel currently costs around Tk205. At the new retail price of Tk135, the government says it is still absorbing a loss of about Tk70 per litre.
International oil prices, however, fell on Monday, with November futures dropping 2.11% to around $98 a barrel, compared with $109 on September 15.
The price increase has also revived questions over taxes on fuel and inefficiencies in the distribution system.
The National Board of Revenue collects taxes and duties equivalent to 25% on refined petroleum and 27.5% on crude oil. Government revenue from imported diesel amounts to around Tk38 per litre in duties and taxes.
FBCCI Administrator Md Fazlul Hoque said increasing retail prices should not automatically be considered the only solution, arguing that the government should also look at reducing waste and system losses in fuel supply and distribution.
Bangladesh has seen the inflationary consequences of major fuel adjustments before. In August 2022, diesel prices were increased by 42.5%, or Tk34 per litre, followed by increases in transport and production costs.
Inflation subsequently rose from 7.5% to 9.5%, according to the figures cited in the report.
This time, the first round of higher costs has arrived almost immediately.
With inflation already above 8%, the bigger concern is what follows as the Tk20-a-litre increase works its way from diesel pumps into buses, trucks, irrigation fields, factories and, eventually, household bills.
