News

Dec 03, 2023

Pain at the pump: Bangladesh imposes steep fuel price hikes — BenarNews

Bangladesh reeled Saturday after the government raised fuel prices by about 50

Bangladesh reeled Saturday after the government raised fuel prices by about 50 percent overnight, saying it needed to pass the high price of energy on to consumers.

Drivers – mostly on motorbikes – jammed gas stations overnight as they tried to refuel ahead of the price hike, with fist fights breaking out in some places.

State Minister for Power, Energy and Mineral Resources Nasrul Hamid said the government was raising prices to reflect the international market, as his ministry announced the price hikes Friday evening.

"If the price comes down in the world market, then we will adjust the price again," he said. He also blamed Russia's war in Ukraine, which has caused global fuel and food shortages.

Diesel and kerosene prices are now Tk 114 ($1.20) per liter, a 43-percent hike; gas costs Tk 130 ($1.37) per liter, up 52 percent; and octane now costs Tk 135 ($1.42) per liter, a 52-percent increase, a statement from the energy ministry said.

Planning Minister M. A. Mannan, meanwhile, said that the government had increased the price of fuel because "huge subsidies" in the sector had become a burden.

He implied that the International Monetary Fund, from whom Bangladesh is seeking a loan, would demand subsidy cuts.

"Whatever you say, when the IMF or World Bank is suggesting reformation in the financial sector, they basically are advising to follow their guidelines, which are always against subsidies," he said.

Ahsan H. Mansur, executive director of the Policy Research Institute of Bangladesh, told BenarNews that the government's move to reduce fuel subsidies indicated that it was preparing to negotiate its loan request with the IMF.

About the fuel price hike, he said: "It was unavoidable for the government in the current economic crisis."

In late July, Finance Minister A.H.M. Mustafa Kamal confirmed that Bangladesh was seeking a loan from the International Monetary Fund. Another ministry official said the government had asked the Washington-based lender for U.S. $4.5 billion.

In early July, Prime Minister Sheikh Hasina called for U.S. sanctions imposed on Russia for invading Ukraine to be lifted, saying that people in her country were negatively impacted.

"Your sanctions are targeted at pressuring Russia. But to what extent are they feeling the pressure?" Hasina said. "All countries irrespective of status – developed, developing and low-income countries – have been suffering."

"We need fertilizer, we need diesel, we need other ingredients to increase our production. But we are not getting these," Hasina said.

Bangladesh is struggling with depleted foreign currency reserves, high inflation and a sharp dip in the taka's value against the U.S. dollar.

Government officials deny that the South Asian country is facing the type of economic trouble that plunged Sri Lanka into deep turmoil. Nonetheless, Bangladesh, like its neighbor to the south, has had to implement power blackouts while seeing prices for food and consumer goods soar.

Bangladesh's inflation rate has topped 6 percent for nine consecutive months, with annual inflation hitting 7.48 percent in July.

The country's currency, the taka, has declined by around 20 percent against the dollar in the past three months.

Earlier this week, the government increased the price of urea fertilizer by 38 percent for the first time in 11 years, in a country where half the population is employed in agriculture.

And on Saturday, the Bangladesh Road Transport Authority increased the price of bus fare by up to 22 percent.

Fewer buses plied the streets of Dhaka than usual on Saturday, leaving many citizens to walk to work or board buses bursting with passengers.

A driver waiting to fill his tank late Friday predicted more economic pain after the gas price hike.

"I'm not sure if the price of fuel oil has ever increased by 45 takas per liter all at once, since Bangladesh was established," the man, who did not give his name, told a reporter at the scene.

"I can manage without using this car. But the cost of commodities will increase now, too. What will ordinary people do? How can they eat?" he asked.

Add your comment by filling out the form below in plain text. Comments are approved by a moderator and can be edited in accordance with RFAs Terms of Use. Comments will not appear in real time. RFA is not responsible for the content of the postings. Please, be respectful of others' point of view and stick to the facts.