The government is in serious dilemma over its role in the context of growing prices of fuel oils in the international market and the national elections due early next year.

Finance and Planning Minister M Saifur Rahman said increasing the domestic prices of fuel oils will definitely have a negative impact on inflation and not adjusting the prices will badly affect the overall economy.

"I spent sleepless nights for the past one week due to continued rise in fuel prices in the international market," he said adding the government will be in further troubles as currently the government is subsidizing Tk 20-22 for each liter of oils.

He also hinted at an unanimous decision of the government on the fuel price hike issue. "Whatever decision it takes would be a collective decision," he noted.

"Something, which will be less painful for the people, as well as less harmful for the economy, has to be done soon," Saifur said.

The state-run Sonali Bank is already in serious liquidity crisis after financing oil imports by the Bangladesh Petroleum Corporation (BPC). The bank owes over Tk 5,000 crore to BPC.

Saifur said if a country like Bangladesh spends all its money for fuel imports, expansion of private sector would be hampered. "Monetary expansion is impossible without a fine balance of micro and macro economy," he added.

To raise the fuel price at this moment is a very formidable challenge for the government, he said, adding the matter needs to be resolved without affecting the people's purchasing power further.

The minister criticized the multilateral lending agencies, such as the World Bank, the Asian Development Bank and the Islamic Development Bank, for their reluctance to extend support in handling the situation.

Country's leading economists also advised the government to devise a long-term plan, instead of any short-term remedy, to resolve the crisis on the economy created by the oil price hike in international market.

They suggested increasing the prices of petrol and octane without raising the diesel and kerosene prices to ensure that the middle and lower class people remain unaffected.

"Problem of the fuel oil prices is not a short-term one, as the prices may rise further next year. Our economy must be prepared to take this pressure," Wahiduddin Mahmud, an economist, told reporters last week after a pre-budget meeting with Finance and Planning Minister M Saifur Rahman at the Finance Ministry.

"We have told the minister not to raise the prices of diesel and kerosene at the moment," Prof Kholiquzzaman Ahmed, president of Bangladesh Economic Association, said.

Economist Debapriya Bhattacharya said it is very urgent for the government to raise the prices, but the government could find out other ways to adjust the price, such as by adjusting the duty.

Members of Parliament at a meeting with the finance minister also viewed the same as observed by the economists.

They urged the government not to raise the prices of diesel and kerosene as it could have a negative impact on the nation before the next year's general elections.

Sources said the high command of the government is in a fix what to do with the context of the increasing fuel prices in the national markets and the general election that is knocking at the door.

Concrete Decision by One Week
Saifur Rahman, meanwhile, said the government would take a concrete decision on the much-talked-about fuel oil price-hike within the next week.

"Price hike of fuel oil is a very sensitive issue as it will affect the country's macro and micro economy," Saifur told reporters after a meeting of the Cabinet Committee on Economic Affairs.

He said Prime Minister Khaleda Zia is the minister in-charge of Energy Ministry and she would take the final decision on the price rise of fuel oils.

Saifur said the fuel price issue is being discussed at various levels, including economists, members of parliament and other stakeholders so that the government, particularly the Prime Minister, could take decision prudently.

He said fuel price issue is not something that is to be done immediately. "Will the government hike the price in secret?" he asked the reporters posing a question.

The minister also said if the private sector could deal with the petroleum products earlier, these problems, which the nation is facing would not appear.

Saifur also criticized the Bangladesh Petroleum Corporation (BPC) for not floating its share in the capital market.

"I don't know why the BPC does not collect money by floating IPO shares in the capital market," he said, adding the government would also be saved from lot of pressures.

Private sector people deal with the fuel oil issue in many countries, he said adding: here the government manages the whole process.

He also cited examples of India and Pakistan in this regard.

Fuel Supply Resumes, Businesspeople Apprehend Crisis
In another development, fuel supply to filling stations from the oil depots resumed on April 30 after the government imposed a restriction on delivery on Saturdays in addition to Fridays, creating a crisis seriously hampering the transport sector in the weekend.

Businessmen, however, said they will not get adequate supply in the month of May following the decision of suspending of oil supply for two days a week. It will create crisis, they apprehended.

The Energy Division ruled out the apprehension saying that the supply in May this year will be 20,000 tons higher than that of the corresponding period in 2005. "So, there is no question of any shortage or crisis," said an official.

A source at Bangladesh Petroleum Corporation (BPC), meanwhile, claimed that a crisis like situation is prevailing is the country as the pump owners are taking more supply but selling less with a belief that fuel price will mark a hike.

According to a senior official at the Energy Division, the supply in May last year was 150,000 tons. This time the supply will be 170,000 tons in the month of May, he said.

"As the depots will remain closed two-day a week, the delivery in May will take place for 19 day. Everyday, the supply will be 9,000 tons," he said.

Nazmul Haque, President of Bangladesh Petrol Pump Owners Association, opposed the decision of suspending supply on Fridays-Saturdays. "In last three months, the daily demand was 14,000 tons. If the supply is reduced, there will be a crisis," he said.

The Energy Division, on the other hand, said that the demand in the irrigation was more. Now the irrigation time is over.

Energy Advisor Mahmudur Rahman said that demand would be fulfilled by supplying 170,000 tons in May. "And the actual demand is not more than that," he said.

Petrol Pump Owners Warn Indefinite Strike

The Petrol Pump Owners Association (PPOA) has announced an indefinite strike in the filling stations from May 8 if its 7-point demands are not met by May 7.

POPA President Mohammad Nazmul Haque at a press conference held at a city hotel gave the ultimatum.

The demands among other things include adjusting their commission at 2.7 percent for petrol and octane, and 2.4 percent for diesel, payment of the cost of carrying fuel to the northern region, stopping harassment to the fuel pump owners at the bordering areas, establishing a realistic monitoring system to eradicate smuggling of fuel and providing firearms to pump owners for their protection.

Nazmul Haque alleged that the government time and again flouted its pledges by not implementing the agreements it signed with the PPOA.

He said different government organizations owe around Tk 800 crore to different pump owners across the country as cost of fuel.

He also said that the government is yet to pay Tk 150 crore as carrying cost of fuel to the northern districts as per a decision taken by the government.

He claimed each day around 180,000 litre of fuel is smuggled into India daily through various land ports as on an average 300 Indian trucks go back to their country filling up their mega-sized fuel tanks.

He suggested formation of a strong monitoring system involving the administration and the association to check it.

Other central and zonal leaders of the association were present in the press conference.

BDNEWS