Bangladesh hikes fuel prices 21 percent in line with global rates

DHAKA, April 2, 2007 (AFP) – Bangladesh’s military-backed interim government said Monday that it raised the price of fuels used for transport and cooking by as much as 21 percent in the face of sharply rising global oil prices. The prices of diesel and kerosene were hiked by 21 percent to 40 taka (27.80 US cents) per litre (0.26 gallon) while gasoline prices increased by around 16 percent to as much as 67 taka per litre, a government statement said.

“The government is aware that the refixation of the fuel prices will increase prices in the agriculture and transport sectors. But the government hopes that the people will take it positively,” the statement said.

The government came to power in January after months of political upheaval led the president to cancel planned national polls and declare an emergency.

It has since launched a string of political reforms and a crackdown on corruption which were said to be necessary before holding new elections.

The statement said local oil prices would now be regularly adjusted to global market rates, which would end a decades-old government policy of selling subsidised fuel in the impoverished country.

World crude oil prices have risen by more than 50 percent since the end of 2004 and now hover around 62 dollars a barrel.

But state-owned Bangladesh Petroleum was selling diesel and kerosene at least 30 percent lower than international prices which encouraged smuggling to neighbouring countries and led to a nearly billion dollar shortfall in the past two years that was covered by the government.

Several experts within and outside of Bangladesh have called for fuel prices to be raised closer to world levels so spending can be instead spent on poverty alleviation programs such as health care and education. Bangladesh is one of the world’s poorest nations with nearly half its 140 million population surviving on less than a dollar a day.