Cooking oil prices spiral as govt dithers over action

The government is likely to reset cooking oil prices, as traders are selling soybean oil at prices higher than the rate fixed earlier.
The prices started an upward climb two weeks ago, according to data from Trading Corporation of Bangladesh (TCB).
“The government seems slow to act,” said Qazi Faruque, president of Consumers Association of Bangladesh. “Traders made hefty profits because of the government's carelessness,” he said.
Retailers sold a litre of loose soybean oil yesterday at Tk 124-128, up 11 percent from two weeks ago.
Refiners increased the prices of bottled soybean oil without informing the government prior to the price hike in line with the law, the Control of Essential Commodities Act.
The prices of a 5-litre container of soybean oil increased to Tk 605-615 from Tk 595-605 earlier this month.
The current prices of open and packed soybean oil are higher than the prices fixed by the government in July; the price of a litre of loose soybean oil at mill gates was fixed at Tk 103-105.
To review the recent hike in prices, Bangladesh Tariff Commission (BTC) Chairman Mozibur Rahman sat with representatives of refiners at his office in a meeting yesterday.
Rahman said a recommendation to adjust prices will be sent to the commerce ministry on Sunday. BTC monitors the prices of essentials.
Blaming the depreciation of the taka against the dollar for an increase in cooking oil prices, he said the monitoring cell would recommend price 'adjustments' with increased import costs.
“The cost against deferred letters of credit (LC) has gone up for some refiners because of the depreciation of the taka,” he said, explaining the reasons behind the price hike.
Representatives of refiners were present at the briefing.
He however did not clarify why the cell had delayed to react to reviewing the recent price hike.
"We will not recommend any price hikes; we suggest adjusting prices with the increased cost of the dollar," said the BTC chairman.
“We will suggest adjustments, not by increasing prices, but by other means -- such as reduction of VAT -- so that consumer's sufferings do not increase,” he said.
Referring to the claims by refiners and importers, Rahman also said bank interest rates were partly responsible for the soybean oil price hike.
Banks are taking service charges along with interest rates against opened LCs, increasing the importers' costs, Rahman added.
However, representatives of refiners did not mention the names of those banks charging higher fees.
The BTC chairman also pointed at a surge in demand for soybean oil in the recent cold wave for the price hike as palm oil solidifies in low temperatures.
He said there is no shortfall of palm oil in the market; but there is a supply-demand gap for soybean oil.
On loose soybean oil, Rahman, referring to refiners' claims, said the refiners are yet to increase prices as they are charging Tk 106 a litre.
But a section of refiners charged more than the government rate, while some have reduced the supply to create a shortage in the market so that prices go up, according to some distributors. However, in the last few months, prices of soybean oil in the international market dropped.
But Mohammad Ali Bhutto, general secretary of Bangladesh Edible Oil Wholesalers Association, denied the refiners' claims, saying they are not getting soybean oil at Tk 105 a litre.
“Let the refiners make public the daily report on whom they sold soybean to at Tk 105, and in what quantities,” he said.
Meanwhile, TCB began open-market sales of soybean oil, along with sugar and pulses in Dhaka. The agency charges Tk 115 for each bottled litre.