Home World wide High fuel prices in India pose risk of smuggling from Bangladesh
World wide - July 13, 2021

High fuel prices in India pose risk of smuggling from Bangladesh

Special Correspondent:As petrol and diesel prices have continued to remain high in India, the risk of fuel smuggling to the neighbouring country is rising day by day.
Bangladesh government now plans to adjust petroleum fuel prices fearing the smuggling of costly fuel to India due to the price mismatch, State Minister for Power and Energy Nasrul Hamid has said.
Petrol price crossed the Rs 100 per litre mark in India on May 29 this year and the rising trend continues since then. Petrol price in Bangladesh has remained at Tk 86-89 per litre since 24 April 2016. India makes changes to fuel prices frequently depending on international prices, while Bangladesh does not frequently changes fuel prices in line with fluctuations in global prices.
The Ministry of Power, Energy and Mineral Resources is going to sit next week in a bid to adjust petroleum fuel prices.
“I have asked the energy and mineral resources division (EMRD) to arrange a meeting next week to review the petroleum fuel tariff,” Nasrul Hamid said. Petrol price in New Delhi soared to Rs 100.91 per litre and diesel price rose to Rs 89.88 on Saturday, while in Mumbai, the Indian financial capital, retail petrol price was much higher at Rs 106.93 and diesel price at Rs 97.18 per litre.
So far in July, petrol prices have been hiked six times while diesel rates have seen a rise four times, according to Indian media reports.
During the month of June, both the auto fuel prices were hiked on 16 occasions, which followed the 16 hikes in May. Fuel prices, on the other hand, remained static in Bangladesh since late April 2016 when petrol price saw a Tk 10 cut to Tk 86 per litre and diesel price by Tk 3 to Tk 65 per litre after a slump in global oil prices. The state-owned Bangladesh Petroleum Corporation (BPC) is now incurring losses as global fuel price crossed $70 per barrel, Nasrul Hamid said. Brent crude oil price at the international market crossed the $70 mark on June 2 and the price stood at $75.55 per barrel on Saturday.
BPC has started counting losses after five years due to higher fuel oil prices globally amid the coronavirus crisis.
It now incurs a loss of an estimated Tk 80 million a day in oil trading, BPC sources said.
To reduce losses, the energy ministry has already increased the price of furnace oil by Tk 11 per litre, or 26.19 per cent, to Tk 53 per litre with effect from July 04.
Presently, the petroleum corporation incurs a loss of around Tk 6 per litre in diesel trading. Despite furnace oil price hike, it suffered a loss of around Tk 1-1.5 per litre as of July 04. BPC is at a break-even position in octane trading.
Every day, the BPC sells 12,000 to 15,000 tonnes of diesel in the domestic market after imports. But, it came down 7000-8000 tonnes during the second wave of Covid-19 crisis.
“Over tariff adjustment of petroleum fuels in India, Bangladesh also fears that it might cause smuggling of the costly fuels to the neighbouring country,” Nasrul Hamid also said.
Senior Secretary of Energy and Mineral Resources Division Md Anisur Rahman said they are now worried much more as the tariff of petroleum fuel is a little bit higher compared to the fuel purchase from the international market.
“Previously, we have sent a letter to the home ministry to tackle fuel smuggling. I think fuel is not being smuggled as per the report of daily consumption of petroleum fuels,” he said.
Md Anisur Rahman said all entrances of the border have already been closed to tackle the Indian delta variant of coronavirus. “It also stopped the fuel smuggling to India,” he told.
ABM Azad, chairman of Bangladesh Petroleum Corporation (BPC), said BPC has already informed the ministry about the present situation of petroleum fuels prices.
“We can go for tariff adjustment of petroleum fuels following the instructions of ministry. Now the BPC has no problem over the international tariff hike of fuels as it purchases fuel every six month,” ABM Azad said.
He added the BPC is now adjusting the tariff of furnace oil and Jet-1 fuel every month under its own policy. But the rest of the fuel tariff will be adjusted based on the ministry’s decision, he informed.
Dr M Tamim, professor of petroleum engineering and dean of the Engineering Faculty at BUET, said the government should keep up with international market prices.
“Previously, the government mostly hiked the tariff when the international prices had increased,” he said.
“When the government will cut the tariff due to a price fall in the international market, people will not question any upward adjustment in line with the international prices,” he pointed out.
Only private vehicles owners will be affected due to any hike in petrol and octane prices, he said.
He suggested taking the Indian example to adjust the diesel and furnace oil prices. “Otherwise, public suffering will be intensified during upward adjustment of diesel and HFO tariff and transport owners will be benefited during the downward adjustment of diesel and Furnace Oil,” M Tamim added.

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