Increase in fuel prices assailable

Still, two arguments are being advanced in favour of the oil price hikes by the energy ministry: one, smuggling of lower priced diesel and kerosene from Bangladesh into the higher priced Indian market for the same; and two, the Bangladesh Petroleum Corporation (BPC) is incurring an annual loss of Tk 2,200 crore through the subsidised fuel prices in Bangladesh. So, the line of argument is: the price differential with India has to be reduced by raising diesel and kerosene prices in Bangladesh so as to put a lid on smuggling and also to allow the BPC to tide over its losses.

All this doesn't stand to reason. In the first place, why must the cost of the failure to curb smuggling which basically mirrors failed border security vigil be borne by farmers and consumers in terms of higher irrigation costs and food prices respectively? Even the cost of transportation which is largely diesel-fuelled will go up across the board. As for the drain on the BPC's finances, we have to say that this could be significantly averted if the high import duties on oil were lowered by the government.

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Finally, we agree with the experts who maintain that this is wrong time to have costlier diesel and kerosene. When the rate of inflation is close to a double digit figure, it is no good economic sense to be fuelling it further by any wrong policy. Taka is weakening against euro and dollar making imports costlier; and announcement of new pay scales for government officials is round the corner with the attendant prospect for adding to the inflationary pressures.

We urge the government to review the decision.