Recently, the head of Bangladesh Petroleum Corporation (BPC) communicated with the Energy Division concerning the financial challenges and losses faced by the corporation. In a letter dated September 8, two primary factors were pinpointed as the key reasons behind BPC’s financial woes. The first factor was the irregular adjustment of domestic fuel prices to match global prices, while the second factor was the alteration in the methodology for calculating duties and taxes on petroleum products introduced in June 2025.
The revised system now computes duties and taxes on imported petroleum products based on their actual import or invoice value rather than a fixed tariff value. Consequently, as international fuel prices escalate, the duty payable also rises correspondingly.
Although the government has emphasized the need to align domestic prices with global trends, the significance of the new duty and tax calculation method has not received adequate attention. Nonetheless, this change has substantially contributed to BPC’s financial losses. According to BPC, this alteration has escalated its tax burden by approximately Tk 15-20 per liter compared to the previous system.
Prior to June 2025, the National Board of Revenue (NBR) levied an import duty of Tk 16.76 per liter based on the tariff value. With the new assessment based on invoice value, as global fuel prices surge, BPC’s duties and taxes also increase, leading to higher government revenue collection.
Following the surge in fuel prices due to the Middle East conflict, the import duty climbed to Tk 38.64 per liter in March, Tk 38.90 in April, Tk 29.74 in July post the Iran-US agreement, and Tk 32.44 in August. It is anticipated that the duty in September will reach around Tk 38-40 per liter.
To mitigate its losses, BPC proposed several measures, including adjusting domestic fuel prices in line with international rates, receiving the full loss amount as a government subsidy, reverting to the previous duty assessment system, or temporarily exempting duties and taxes until geopolitical conditions improve.
Among these options, increasing fuel prices could have the most detrimental impact on the economy and people’s livelihoods. A hike in fuel prices extends beyond fuel stations, affecting transportation, agriculture, industries, and services, leading to overall inflation, diminished purchasing power, and reduced competitiveness for exporters.
Conversely, reducing duties and taxes on imported fuel would have the least harmful repercussions. Many governments globally temporarily decrease fuel taxes during sharp rises in international prices to shield consumers. India has already taken such measures following the Middle East conflict outbreak.
Regrettably, the government led by the BNP has opted for the option with the most adverse potential impact. Starting from September 21, diesel, petrol, octane, and kerosene prices were raised by Tk 20 per liter. Diesel is now priced at Tk 135, up from Tk 115, kerosene at Tk 155, up from Tk 135, petrol at Tk 160, up from Tk 140, and octane at Tk 165, up from Tk 145. These prices mark the highest in the country’s history and signify the third fuel price hike in seven months under the current administration, totaling an increase of Tk 35 for diesel, Tk 43 for kerosene, Tk 44 for petrol, and Tk 45 for octane.
Despite the latest increase coinciding with international crude prices not being at their historical peak, with prices hovering around $100 after peaking at approximately $126 a barrel in April post the conflict outbreak, the government justified the hike citing elevated international prices.
The repercussions are already evident, with bus fares raised by Tk 0.17 per kilometer, long-distance bus fares increasing by Tk 50-100, local buses on the Dhaka-Chattogram route imposing an extra Tk 5-10 charge, truck freight rates climbing by Tk 2,000-8,000, and private container depot owners applying a 9.85 percent fuel surcharge on container handling.
The increased diesel price will further burden farmers grappling with the fertiliser crisis. Approximately 24 percent of diesel consumption in Bangladesh, around 10.44 lakh tonnes, is utilized in agriculture. Diesel is crucial not only for irrigation but also for operating various agricultural machinery and tools for land preparation, planting, harvesting, threshing, and transporting agricultural produce. Consequently, the rise will impact nearly every phase of agricultural production, intensifying pressure on farmers, food production, food security, and inflation.
Inflation has persisted above 8 percent for an extended period, while wage increments have not kept pace, new job opportunities are limited, and economic activities remain subdued. Escalating fuel prices in such circumstances will exacerbate the situation further.
The government justified the increase by pointing to higher fuel prices in different countries but failed to compare factors like purchasing power, minimum wages, or inflation rates in those nations. Such comparisons are crucial, especially for lower-income individuals who find it challenging
