Bangladesh has listed its name among those few countries that kept the domestic oil price high, being the highest among the South Asian countries, despite the drastic fall in the international oil price.
Although Bangladesh Petroleum Corporation (BPC) had never made profit in its operations since 2001-02 fiscal, it bagged a profit worth around Tk 5,268 crore in 2014-15 fiscal year, according to the Corporation data.
Unfortunately, the Finance and Energy, Power and Mineral Resources ministries and, especially Finance Minister AMA Muhith have chosen the unreasonable tricky ways to keep the prices of fuel oil unchanged just citing the issues of the government's liability and unpaid bank loans of BPC.
In our investigation we found that the state-owned BPC never incurs any loss in selling petroleum products in the country rather it paid huge amount of tax and VAT to the government exchequer, then the question arise why the government is unwilling to adjust fuel price?
The BPC's website showed that BPC paid Tk 47,218 crore to the national exchequer as taxes and duties over the years, however, the Finance Ministry claimed that BPC's liability is about Tk 26,000 crore (cumulative loss).
In January 18, 2016 the average price of gasoline around the world was US$0.98 per litre. However, there is substantial difference in these prices among countries. As a general rule, richer countries have higher prices while poorer countries and the countries that produce and export oil have significantly lower prices. The differences in prices across countries are due to the various taxes and subsidies for gasoline. And Bangladesh is the right example of this price difference keeping the domestic oil prices high despite the drastic fall in the international oil prices which is now only $20 per barrel.
"Yes, it is saying that the BPC was given a huge amount of subsidy over the years, if it is so then the money was given through budgetary allocations, however, if it is a fact then why it is said that it is loan money and to adjust the loss of BPC the government is unable to cut the fuel price in line with the price fall in the international market for the last one year?" Former Energy Adviser Dr M Tamim questioned.
He said it is also a popular quote of the government that if we cut the fuel price than there will be no impact on transport sector and other sectors, "It is unacceptable, the people gave them the mandate to work for the wellbeing of the people, if the neighbouring country, India, can do that why can't we, it is absolutely the government's failure," he added. He suggested that the government introduce a formula, like in India, for automatic price adjustment in line with the international petroleum market price.
According to the NBR, the BPC is paying 31.7 per cent different types of taxes in importing crude oil, however, it imposes 37 per cent taxes on diesel, 34 per cent of taxes on furnace oil and 34 per cent of taxes on kerosene (per barrel). Eminent economist Prof Anu Muhammad said the government is playing the role of a trader.
"Due to this profit making mind-set, the people of the country as well as the country's economy have failed to enjoy the outcome of fuel price cut in the international market, this is unfortunate," Prof Anu Muhammad added.
When contacted the Energy Division told the Daily Observer that the Ministry of Finance has a plan to reduce petroleum prices in line with the plummeting global oil prices and decided to clear BPC's liability of Tk 26,000 crore in order to implement an automatic price adjustment formula.
"The government was considering introducing a formula for automatic price adjustment in line with the international petroleum market by March to serve the causes of both the government and the consumers," the official said preferring anonymity.
While Dr Tamim told this correspondent that the biggest issue here is whether the policymakers see the deep impact of oil price on our everyday lives and our personal monthly budget and how a proper oil price adjustment can make our economy and individual lives even more vibrant.
He said, "We do not want any government organisation to run in loss. But the BPC is making profit in such a ridiculous way that it will make the world's greediest corporations blush. The government's job is not to make profit-its job is to help people prosper."
According to the Centre for Policy Dialogue, fuel price cuts will have positive impacts on consumers, producers, investment and economic growth. Only the government's profit will go down. At a recent media briefing, the CPD also projected that a 10 per cent reduction in fuel prices would help the GDP grow by 0.3 per cent, and increase export by 0.4 per cent and household consumption by 0.6 per cent. And inflation will decline by 0.2 per cent.
The government last made changes to the domestic oil prices on January 4 in 2013.