World oil price falls but BD consumers pay high
Published : Tuesday, 2 June, 2020 at 12:00 AM Count : 196
Coronavirus pandemic has pushed oil price to its 30-year low in the international market but Bangladesh has failed to take advantage of the declining price.
Brent crude oil sold at $20.49 on April 26, 2020. Oil importing countries like Germany, Japan and India took the advantage and supplied it to their consumers at the lowest price.
But Bangladesh is still struggling to manage a LPG (Liquefied Petroleum Gas) bottle at an announced rate and people are paying the same amount to refill vehicles driven by petroleum products during this time.
As per present market price, the price of a 12 KG LP bottle is between TK750 and TK800 but unfortunately people are now paying TK950.
By the time Indian government has lowered the LP gas price from RS 192 to RS162 (in different metropolitan cities) since April to rationalize the price with the international market," a senior official of BPC said preferring anonymity.
Bangladesh's fuel market is determined by the government executive order driven by the international market price but Bangladesh's regulators follow only the upper trend of the market, it has never adjusted the price with down trend excepting only one example during the caretaker government period in 2002.
Meanwhile, Bangladesh Petroleum Corporation (BPC) has taken a move to store some extra petroleum fuel by purchasing it to take the advantage of lower price but failed as they didn't have enough storage capacity.
"We have never been able to formulate an energy pricing policy over the last 50 years since independence. Everybody talks about it but nobody is ready to enact it," said former adviser to a caretaker government, energy expert and also a BUET teacher DR M Tamim.
"If we had a fuel pricing policy like India we would be compelled to rationalize the price and mass people would get the benefit out of it," DR M Tamim.
"The government is keeping aside the benefit for itself to make up for tax deficit. The fall in crude oil prices doesn't have any effect on the retail prices of petrol and diesel as the government wants to cash it," he added.
He said the government should adopt a clear-cut policy on energy pricing. It can put aside an amount for itself and the rest for public. It can bring some benefits for people and the government as well.
Meanwhile, LPG Operator Association of Bangladesh (LOAB) President Azam Z Chowdhury said the members of the association sell gas cylinder at a rate of TK730-TK840 but the consumers are paying abnormal price for it because of a strong syndicate among the distributers.
"We need to break the chain otherwise people will continue to suffer," he said.
"It is a fact that oil price has plunged by 24 percent. It has never happened since 1991. But strict lockdown across the country has restricted the movement of vehicles causing a severe slump in fuel demand.
This has also caused tremendous loss to the oil marketing companies (OMCs) like Padma, Meghna and Jamuna. In order to take care of those losses, the oil companies are not allowing the benefits to pass on to the retailers and are instead using low crude oil prices to offset their own losses.
Even apart from these reasons, there are multiple factors including USD-TK exchange rate, etc that play an equally important role in determining the overall retail prices of petrol and diesel," a senior official of the BPC said.
Due to the shutdown of factories, public transport and airlines in compliance with the government order to prevent the spread of coronavirus, the consumption rate has declined by more than 60 percent," he added.
The BPC has a storage capacity of 950,000 tonnes of petroleum fuel which can meet about 60 days' requirement. The BPC sources said Bangladesh annually imports 5.5 million mts of petroleum fuel as its daily consumption demand is 15,000 mts.