The Bangladesh Trade and Tariff Commission (BTTC) has recommended setting the maximum retail price of soybean oil at Tk 124 a litre to tame its spiralling rates in the local market.
Now bottled soybean oil is sold at Tk 130 a litre on an average, which is exorbitantly high, the commission said in its report recently submitted to the commerce ministry.
Moreover, the cost for each empty one-litre bottle of soybean oil has been fixed at Tk 15 and the five-litre ones at Tk 50, which are also very high considering the current state of the plastic market, it said.
The cost of empty bottles should be lowered now to make soybean oil a bit cheaper, the commission suggested. The price monitoring cell has agreed to set the maximum retail price for loose soybean oil at Tk 109 a litre, according to the BTTC report obtained from the commerce ministry.
Crude soybean and pam oil prices have increased 63 per cent in the last six months to hit $1,200 and $1,150 a tonne in the international market, according to the report.
To cool down the prices, the government should now follow the 2011's model of pricing, under which a 15 per cent VAT was collected on 67.67 per cent of the soybean oil's import price to keep the prices low for the general mass, the report suggested.
Otherwise the oil prices will rise up to Tk 150 to Tk 155 a litre after a month when the crude oils which have already been imported will get refined to be made edible, it said.
Considering the purchasing power of the general public, the cell also wanted to see changes in the tariff setting system as well as exemption of advance VAT.
The recommendations are vital for the market as the prices of essential commodities, including edible oil and sugar, are determined based on the opinion of the Essential Commodity Price Monitoring Cell (ECPM) of the BTTC.
In case of profits per litre, the oil companies are allowed to have a maximum margin of 2 per cent while the distributors Tk 4 and the retailers Tk 8.
The cell sets the mill gate price, distributor price and maximum retail price of all kinds of soybean oil.
The ECPM takes into account several issues, including the international market prices, VAT and tax, refining cost, bottle price and profit of the company, before determining the retail price of a product.
"The price of edible oil in the global market is increasing almost every day, as big countries like China are stockpiling edible oil from the international market amid the pandemic," said Biswajit Saha, director of City Group.
Beside, production of top oil exporting countries, including Brazil and Argentina, has declined because of the Covid-19 outbreak, he said.
The import price may increase further and this could impact Bangladesh's local market, Saha said.
"Over the last few months, we have been urging the government to withdraw the advance tax and reduce the VAT at the import stage to keep the oil market stable. But the government is yet to implement it."
Meanwhile, the commerce ministry has decided to sit next Sunday to fix the price of edible oil as part of efforts to keep the market stable, Commerce Minister Tipu Munshi told The Daily Star yesterday.
"The meeting will take up the BTTC report as well as the suggestions of the authorities concerned. I hope a decision will be taken that day," he said.
According to the National Board of Revenue, there is a demand of about 17 lakh tonnes of edible oil in the country every year and imports meet 94 per cent of the demand.
About 16 lakh tonnes of crude soybean and crude palm oil were imported in the 2019-20 fiscal year.
Moreover, refined soybean and refined palm oil are also imported but the quantity is negligible.
Some 8.23 lakh tonnes of crude soybean and palm oil worth Tk 5,033 crore was bought in the first six months of fiscal 2020-21, down from 10.63 lakh tonnes worth Tk 5,432 crore in the same period the previous year, according to data from Chattogram Custom House.