Govt plans to cut fuel prices

The government is once again considering cutting fuel prices in line with the international market so that the economy can benefit from it.

The issue was discussed at a meeting, chaired by Finance Minister AMA Muhith, of the fiscal coordination council yesterday at the secretariat.

At the meeting, the energy ministry has been asked to send a proposal to the finance ministry about the fuel price cut. The meeting discussed the price cut but the decision in this regard will be taken later, according to a finance ministry official.

Oil fell to its lowest in three months yesterday, as the prospect of another year of oversupply and weak prices overshadowed chances that Opec will reach a deal to cut output. Brent crude futures fell 50 cents on the day to $44.25 a barrel.

Earlier in April, Bangladesh cut the prices of octane and petrol by Tk 10 a litre and diesel and kerosene by Tk 3, aiming to pass on to consumers the benefits of low prices on the international market. The price of diesel and kerosene is now Tk 65 a litre, octane Tk 89 and petrol Tk 86.

In April it was said that the cut would be part of a government plan to reduce the fuel prices in three phases, according to energy ministry officials.

After lowering the price in April, it now costs Bangladesh Petroleum Corporation Tk 61.25 for producing a litre of octane, Tk 62.5 for petrol, Tk 49.25 for diesel and Tk 48.25 for kerosene.

Despite the cut, BPC will still make a profit of Tk 27.75 a litre on octane, Tk 23.5 on petrol, Tk 15.75 on diesel and Tk 16.75 on kerosene. 

The fiscal coordination council meeting observed that the economy was in good shape but it expressed concern over the fall in remittances in the current fiscal year.

The finance minister also said they do not have any plan to lower the rate of interest on savings instruments. Muhith, however, said he would review the situation by 2017 and evaluate whether it would be wise to lower the rate.

As the sales of savings instruments went up, the government did not have to borrow from the banking system this fiscal year. He however admitted that the interest rate on savings certificates is higher than in the case of bank borrowing.

The council meeting also made a preliminary budget estimate for the next fiscal year, which will be finalised later, Muhith said. The budget would be Tk 390,000 crore, up from the current year's Tk 340,605 crore. The economic growth target for the next fiscal year would be 7.4 percent in contrast to 7.2 percent this year.

“The economy is very good this year as there is no political problem. Revenue collection is close to the target and the expenditure is better than last fiscal year,” Muhith said.