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Fuel price yanked up

Govt reasons it on high international rates, smuggling; DCCI protests

STAR REPORT
The government has increased fuel prices by around 13.75 per cent on average, effective from yesterday.
The price of kerosene, however, remains unchanged at Tk 17 per litre.
Liquefied petroleum gas (LPG) has not been exempted from the price revision though and will now be sold at Tk 335 per 12.5-kilogram cylinder, up from Tk 275.
The government puts the hike of up to 17.86 per cent down to "high prices in the international market as well as in India" and also to a bid "to recoup losses of the state-run Bangladesh Petroleum Corporation (BPC)".
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This is the second fuel price-hike since the present government came to power a year and three months back.
Earlier on December 27, 2001, just over two months after it assumed office, the Bangladesh Nationalist Party-led coalition effected an increase of around ten per cent.
The price of petrol has marked the steepest rise in the new structure, up 17.86 per cent to Tk 33 per litre. Diesel ranks second at Tk 20 per litre, a 17.65 per cent rise from Tk 17. Octane will now be sold at Tk 35 per litre, up 16.67 per cent from Tk 30.
Jet fuel price rose 13.48 per cent to Tk 24 per litre from Tk 21.15 and furnace oil 11.11 per cent to Tk 10 per litre from Tk 9.
"The price hike was inevitable due to high price of petroleum on the international market as well as in India," State Minister for Petroleum and Mineral Resources AKM Mosharraf Hossain said while detailing the new rates at a press conference yesterday afternoon.
Prices on the local market are much lower than on the international market and even in India, he told newsmen at the energy ministry.
"Such price variations cause huge loss to the state-run oil agency and encourage smuggling of petroleum out of the country. The price increase, however, has been kept at a minimum with a view to minimising its impact on the consumers."
The state minister believes the price revision will help check smuggling to India and other countries where gasoline is costlier than in Bangladesh.
Mosharraf, however, failed to produce any specific data on smuggling of gasoline to India.
"Price differential of a product
between two countries is widely to perceived to encourage smuggling and you cannot fight this with administrative measures," Mosharraf said when asked what the Bangladesh Rifles (BDR) was doing to check such smuggling.
The BPC has Tk 3,100 crore in losses over the years due to the price difference between local and international markets, he said. "Although the price increase will ensure an additional Tk 890 crore every year, the BPC will still incur a loss of around Tk 1,000 crore."
Mosharraf also pointed out that the BPC loss rose to such a level, as there had been no price-hike for around two years till December 2001.
The price revision, meanwhile, looks set to burden the common people, already reeling under steep rise in living cost in the last one year. A survey of Consumers Association of Bangladesh (CAAB), the cost of living shot up by 8.52 per cent in the year that just went by.
The price hike, especially of diesel and furnace oil, will tell on agriculture, industry and export, sources said. Also, the transport owners will cite the price revision as reason to increase fare of different passenger vehicles. They are learnt to have been lobbying with the communications minister over the last few days for the price hike.
The Dhaka Chamber of Commerce and Industry (DCCI) yesterday expressed concern over the decision to raise fuel prices.
"Fuel prices hike would not only affect transport, agriculture, industry and export sectors but also increase sufferings of the common people due to acceleration in the rate of inflation," it said in a statement issued last night.
The DCCI also urged the government not to increase the fuel prices
further as businessmen and producers are already burdened with high cost of business prompted by enhanced prices of other utilities such as power, water and gas.
It also refuted the government rationale that the hike was due to smuggling and low prices in neighbouring countries, saying "it does not match with the national development strategy on the one hand and individual business plan on the other".
The DCCI felt the necessity of strict surveillance and improved role of law enforcing agencies and border forces and close monitoring of fuel dealership to stop leakage.