DHAKA: Fuel prices in Bangladesh increased more than 51 percent on Saturday — the steepest rise in the country’s history — as the government said it is trying to keep oil supply normal.
Bangladesh’s $416 billion economy has been one of the fastest growing in the world for years, but the country has struggled with globally rising food and fuel prices, which inflated its import bill. The government in July began a loan application with the International Monetary Fund, which experts said is aimed at creating a buffer in its reserves.
The price of petrol was increased by 51.1 percent and diesel by 42.5 percent, Dhaka announced late on Friday, leading to thousands of Bangladeshis racing to fuel stations nationwide to try to fill their vehicles before the hike went into effect.
The price rise comes after state-run Bangladesh Petroleum Corporation recorded a loss of more than 80 billion taka ($840 million) between February and July due to fuel subsidies, the Ministry for Power, Energy and Mineral Resources said in a statement.
“There was no option but to increase the prices to keep the fuel oil supply normal,” Minister for Power, Energy and Mineral Resources Nasrul Hamid told reporters on Saturday.
Hamid appealed for patience and acknowledged that the new prices “will not seem tolerable to everyone.”
“We are repeatedly asking everyone to be frugal, to save on fuel and to use cars less often because the transport sector is the biggest user of diesel,” he said.
“We will readjust the prices if they come down in the international market.”
Bangladesh’s inflation rate hit 7.48 percent in July amid soaring global energy prices in the wake of Russia’s invasion of Ukraine, though oil has fallen back in recent weeks.
Economists said that the price hike on Saturday could have been implemented slowly, as the increase is expected to severely affect poorer people already under strain because of the rising cost of living.
“If the price hike was inevitable to reduce the losses, the government could have done it gradually. Like every six months, the fuel price could be increased by 4 to 5 percent. It would be much easier for the people to bear,” Asaduzzaman, former research director at the Bangladesh Institute of Development Studies, told Arab News.
Asaduzzaman said that he is worried about the effect on food supply in Dhaka, with many essential items transported from different parts of the country to the capital.
“This price hike will add to inflation tremendously as it will make the supply chain within the country much costlier. Food supplies will be impacted to the highest level,” he said.
“The poor will suffer most due to this fuel price hike.”
Higher fuel prices will “create huge pressure on people’s lives” and stoke inflation, Fahmida Khatun, executive director at the Center for Policy Dialogue in Dhaka, told Arab News.
Khatun said that the increase will have an immediate effect on transportation, house rental, electricity bills, industrial production and irrigation in Bangladesh.
Amir Hossain, a farmer from Rajshahi city, told Arab News that the price hike will increase his irrigation costs.
“An increase in fuel price around 50 percent is truly unbearable for the poor like me. Our cost of living will be increased at an even higher rate. But where will I get the increased earnings?” Hossain said.