Hike likely in May

The Finance Division has proposed another increase in prices of fuel, fertilisers and electricity in the current fiscal year, says a highly placed source in the finance ministry.
The premier has outright rejected the proposal to hike fertiliser price but did not give any decision about other items, the source adds.
The proposal was made at a meeting with Prime Minister Sheikh Hasina yesterday with the suggestion that the price hike would be effective after the Boro season.
An official said no decision was taken regarding price hike, but the Finance Division has suggested that prices be increased within this fiscal year. The official added if the government takes such a decision, it may be effective after April.
Prices of all petroleum products were hiked by Tk 5 per litre last time and might be increased by another Tk 5 next time, sources say.
Since May 2011 till January this year, fuel prices were upped by Tk 17 in four phases and furnace oil price went up by Tk 34 in six steps.
The current prices of diesel and kerosene stand at Tk 61 which was Tk 44 before May last year. Petrol and octane now sell at Tk 91 and Tk 94 respectively against the prices of Tk 74 and Tk 77 before May.
Furnace oil price is Tk 60 now which was sold at Tk 26 early last year.
After the ruling Awami League assumed power, fuel prices were not hiked in 2009 and 2010.
After two hikes in last three months, power price now stands at Tk 5.02 per kilowatt-hour, which was earlier Tk 4.16 Kw/hour.
The incumbent government also increased price of urea fertilisers by Tk 8 per kilogram in June last year and fixed the price at Tk 20.
However, the government decreased the price of non-urea fertilisers three times.
To justify its proposal, the Finance Division says the difference between the prices in the international and local markets has become narrower due to the recent price hikes, but a huge amount of subsidy is going to fuel thanks to devaluation of taka.
In the first six months of the current FY, the average exchange rate against dollar was Tk 76, which would shoot up to about Tk 84 by the end of the FY, projects Bangladesh Petroleum Corporation.
According to a projection by the finance ministry, in the current fiscal year the loss in fuel sector may be more than Tk 15,000 crore.
A finance ministry official says if the price is adjusted again during the current FY, still Tk 12,000 crore will be required in addition to the budgetary allocation on subsidy.
The Finance Division also proposed introduction of an automated pricing formula for fuel. If price goes up by 10 percent in the global market, fuel price will increase in the local market and vice versa.
The premier supported the proposal but did not give an immediate decision in this regard, the official adds.
The Finance Division also suggests separate subsidy be sent to the farmers' bank accounts so that the price hike does not affect them adversely.
State Minister for Power, Energy and Mineral Resources Enamul Haque told the House yesterday the BPC has to count about Tk 1,000 crore in loss every month.