The government was preparing to appoint a commission for automatic adjustment of fuel oil prices in the domestic market in keeping with the international market trends to appease the International Monetary Fund, officials said on Saturday.
They said that finance minister AMA Muhith gave the hint at a recent meeting he had with the officials of the energy division on new fiscal and budgetary measures.
Unlike the energy regulatory commission, they said, the proposed commission would not need to hold public hearing to adjust the fuel oil prices in the domestic market.
The proposed commission would, they said, follow certain guidelines to fix or re-fix the fuel oil prices under a system called, automatic fuel oil prices adjustment formula.
Quoting the finance minister, they said, many countries including in South Asia were already following the method.
Now the government follows a system called ‘administrative price adjustment policy’ to fix the prices of petroleum products, entirely imported.
Introduction of automatic fuel oil adjustment prices is one of the dozen conditions the government agreed to implement over a year to avail IMF’s Extended Credit Facility.
The IMF set deadlines for meeting each condition for the disbursement of about US$1 billon in credit in seven installments in next three years.
Under the condition, the government would be required to keep the system ready by the year end for introduction.
The automatic price adjust formula, being prepared by the energy division, would allow the proposed commission to adjustment fuel oil prices within five to 10 per cent of the fluctuations in the international market.
Economists said that the new system would adversely impact the economy as it would place extra burdens on the farmers.
The price of diesel would go beyond the reach of the farmers,’ said economists Anu Muhammad.
He said that the government must keep in mind that diesel was essential for irrigating boro fields, the largest source of rice for Bangladesh.
Anu Mohammad said that the Awami League–led government and its finance minister allowed the IMF to impose the unnecessary burden of loan on the nation.
Despite its pressure on successive past governments, IMF earlier failed   to introduce the policy in Bangladesh.
Bangladesh Institute of Development Studies director general MK Mujeri said that he had doubts about how far Bangladesh would be able to fulfill the ‘difficult’ conditions.
State owned Bangladesh Petroleum Corporation, the lone importer and distributor of petroleum products incurs losses each year selling at prices lower than the import prices.
BPC chairman Siddiqur Rahman said that in April the corporation incurred a loss of at least Tk 14 for selling each litre of diesel, the most commonly consumed fuel oil in the country, accounting for more than half of 5.4 million tones of fuel oils Bangladesh imported during the current fiscal.
Consumption of diesel almost doubled since last year because of government policy of dependence on power generation sing diesel and furnace oil fired plants.