Recently Government has increased the price of all fuels despite the gradual fall in the global energy prices in recent times. Government has increased the prices of all the refined fuel oil products by 42.5 to 52 percent on August 5, 2022.
After a long time of stagnant situation in the economy due to COVID, the country has just started to enter into an economic revival phase. In the meantime, Dhaka Chamber of Commerce & Industry (DCCI) thinks that the recent increase of gas price in June 2022 and fuel price hike on 5 August, 2022 will have an immediate negative impact on transportation, essential commodities and electricity. Diesel is the most consumed fuel in the country, accounting for around 73 percent of the country's total fuel consumption. For instance, 90 percent of the transportation sector is dependent on diesel. Additionally, vehicles which are powered by octane and petrol will also have to bear the increased cost. This will also hike the domestic freight cost and eventually will lead to the cost of necessities across the country.
DCCI feels that another major impact will be on the production cost of agricultural products as diesel is widely used for irrigation purpose. Recurring fuel and fertilizer price hikes will directly impact the production cost of agricultural products and gradually hamper food security and further misery in public lives. Manufacturing Industries are already being suffered due to electricity rationing as diesel and LNG price went high globally.
However, this price hike of fuel in addition to the recent price hike of natural gas will have a domino effect on the entire economy, DCCI thinks. The cumulative impact of price hike of fuel will cause inflationary pressure on the economy by raising the operating cost of all energy dependent businesses and industries.
Considering the situation, Dhaka Chamber feels that for ensuring a long term energy security, we need to frame out a long term strategy as well as to continue onshore, offshore gas exploration, energy mix and cost and energy efficient electricity generation. Moreover, austerity in consumption should be strictly followed up. DCCI also recommends to reduce the fuel price as soon as it comes down in the international market considering its negative impact on the economy.
Published on: 2022-08-07