Petroleum Prices in Bangladesh : A Need for Regular and Appropriate Adjustments
Under-pricing of diesel and kerosene continues to cause major financial problems for Bangladesh Petroleum Corporation (BPC), which is losing over Tk 2 billion monthly. Global forecasts suggest that oil prices will continue to be over $US 50 per bar...
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| Format: | Energy Study |
| Language: | English en_US |
| Published: |
Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2007/02/16259427/petroleum-prices-bangladesh-need-regular-appropriate-adjustments http://hdl.handle.net/10986/8054 |
| Summary: | Under-pricing of diesel and kerosene
continues to cause major financial problems for Bangladesh
Petroleum Corporation (BPC), which is losing over Tk 2
billion monthly. Global forecasts suggest that oil prices
will continue to be over $US 50 per barrel for the next
couple of years. Bangladesh's Household Income and
Expenditure Survey data for 2005 indicate that both diesel
and kerosene form a very small part of the budget of the
poor. One option, therefore, is to raise the price of diesel
and kerosene from current Tk 33 to 41 per liter and make BPC
breakeven on its trading costs. BPC's trading cost is
roughly 70 percent of its total current costs; the latter
includes an ever increasing interest bill, currently at Tk
4.7 billion. If the one step increase is considered
difficult, a second option would be to phase the increase
over a six-month period with each increase of Tk 4 per
liter, possibly in sync with the 'boro' rice
planting season. A major communication campaign should be
launched to inform the public the rationale of the price
increase. Future adjustments should be based on a formula
that automatically adjusts prices-both upwards and
downwards, on a regular basis. |
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