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Business News/ News / World/  It’s Bangladesh after Sri Lanka: Protests erupt over 52% fuel price hike

It’s Bangladesh after Sri Lanka: Protests erupt over 52% fuel price hike

Bangladesh announced a fuel price jump over inflation fears.

People refuel their motorcycles at a fuel station after fuel price surge up to fifty percent in Dhaka, Bangladesh, August 6, 2022. REUTERS/Mohammad Ponir Hossain (REUTERS)Premium
People refuel their motorcycles at a fuel station after fuel price surge up to fifty percent in Dhaka, Bangladesh, August 6, 2022. REUTERS/Mohammad Ponir Hossain (REUTERS)

Following the tragic situation in Sri Lanka, thousands of demonstrators flocked to the streets in many Bangladeshi cities when the Sheikh Hasina administration raised fuel prices to their highest level since the neighbouring nation's independence by about 52%.

Angry demonstrators surrounded gas stations all throughout the South Asian country and demanded that the unexpected price increase be reversed. The ongoing conflict between Russia and Ukraine is to blame, according to the government of Bangladesh.

Also Read: Sri Lanka moves ahead to form all-party national government

Bangladesh increased fuel prices by around 50% on Saturday, which will reduce the nation's subsidy burden but increase pressure on inflation, which is currently above 7%. The $416 billion economy of the South Asian nation has long been one of the fastest-growing in the globe.

But as a result of rising energy and food costs brought on by the Russia-Ukraine conflict, the country's import bill has increased, requiring the government to apply for loans from international institutions like the International Monetary Fund.

Also Read: Sri Lanka acquires forex to buy fuel

According to a statement from the power, energy, and mineral resources ministry, the cost of petrol has increased by 51.2 percent to 130 taka (roughly 108) per litre, the cost of 95-octane petrol has increased by 51.7 percent to 135 taka (roughly 113), and the cost of diesel and kerosene has increased by 42.5 percent.

According to the ministry, the hike in fuel prices was unavoidable given current global market conditions. It also pointed out that the state-run Bangladesh Petroleum Corporation had lost more than 8 billion taka (about 667 crore) on oil sales in the six months leading up to July.

Also Read: After petrol, India sends kerosene to crisis-hit Sri Lanka

"The new prices will not seem tolerable to everyone. But we had no other choice. People have to be patient," Nasrul Hamid, state minister for power, energy and mineral resources, told reporters on Saturday.

He said prices would be adjusted if global prices fall.

"It was necessary but I never imagined such a drastic hike. I don't know whether the government is fulfilling the prerequisite to have an IMF loan," a government official said.

The main opposition Bangladesh Nationalist Party (BNP) Secretary General Mirza Fakhrul Islam Alamgir called the government's action "rubbing salt in the wounds" and claimed it would have a disastrous effect on the economy.

The inflation rate in Bangladesh has been above 6 percent for nine straight months, reaching 7.48 percent in July, which makes it harder for poorer families to cover their daily expenses and increases the likelihood of civil upheaval.

"We are already struggling to make ends meet. Now that the government has raised fuel prices, how will we survive?," said Mizanur Rahman, a private sector employee.

The government last raised diesel and kerosene prices by 23% in November which in turn prompted a nearly 30% rise in transport fares.

Global oil prices have eased from their highs in recent weeks and closed on Friday at their lowest levels since February, rattled by worries a recession could hit fuel demand. [O/R]

Benchmark Brent crude futures fell below $95 per barrel on Friday, down from a peak of $133.18 in March.

Amid dwindling foreign exchange reserves, the government has taken a series of measures, including placing curbs on luxury goods imports and on fuel imports including liquefied natural gas (LNG) and shutting diesel-run power plants as it resorted to recurring power outages.

The country's foreign exchange reserves stood at $39.67 billion as of Aug. 3, sufficient to cover only about five months of imports and down from $45.89 billion a year earlier.

(With agency inputs)

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Published: 07 Aug 2022, 06:12 PM IST
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