Petroleum Prices in Bangladesh : A Need for Regular and Appropriate Adjustments

Under-pricing of diesel and kerosene continues to cause major financial problems for Bangladesh Petroleum Corporation (BPC), which is losing over Tk 2 billion monthly. Global forecasts suggest that oil prices will continue to be over $US 50 per barrel for the next couple of years. Bangladesh's Household Income and Expenditure Survey data for 2005 indicate that both diesel and kerosene form a very small part of the budget of the poor. One option, therefore, is to raise the price of diesel and kerosene from current Tk 33 to 41 per liter and make BPC breakeven on its trading costs. BPC's trading cost is roughly 70 percent of its total current costs; the latter includes an ever increasing interest bill, currently at Tk 4.7 billion. If the one step increase is considered difficult, a second option would be to phase the increase over a six-month period with each increase of Tk 4 per liter, possibly in sync with the 'boro' rice planting season. A major communication campaign should be launched to inform the public the rationale of the price increase. Future adjustments should be based on a formula that automatically adjusts prices-both upwards and downwards, on a regular basis.

Bibliographic Details

Main Author:	World Bank
Format:	Energy Study biblioteca
Language:	English en_US
Published:	Washington, DC 2007-02
Subjects:	ADMINISTERED PRICE, ADMINISTERED PRICES, AVAILABILITY, BALANCE, BARREL, BOTTOM LINE, CAPITAL MARKETS, COMMON CARRIERS, CONSUMER PRICES, CONSUMPTION OF PETROLEUM, CONTINGENT LIABILITIES, CRUDE OIL, CRUDE OIL PRICE, CRUDE OIL PRICES, DEMAND FOR PETROLEUM PRODUCTS, DIESEL, DOMESTIC PETROLEUM, DOWNSTREAM OIL, EFFECTS OF FUEL PRICE, ELECTRICITY, ENERGY PRICING, EXPENDITURE, EXPENDITURES, EXPENDITURES ON FUEL, EXTERNALITIES, FINANCIAL BURDEN, FOREIGN EXCHANGE, FREIGHT, FUEL, FUEL PRICE INCREASES, FUEL PRICES, GAS, GASOLINE, GASOLINE PRICES, HIGHER OIL PRICES, HOUSEHOLD EXPENDITURES, INFLATION, INTERNATIONAL CRUDE OIL, KEROSENE, KEROSENE USE, MARKET PRICE, MARKETING, MINERAL, MINERAL RESOURCES, MONOPOLY, OIL, OIL COMPANIES, OIL IMPORTS, OIL MARKETING, OIL MARKETING COMPANIES, OIL PRICE, OIL PRICES, OIL PRODUCTS, PETROL, PETROLEUM, PETROLEUM CORPORATION, PETROLEUM IMPORTS, PETROLEUM MARKETS, PETROLEUM PRICE, PETROLEUM PRICES, PETROLEUM PRODUCT PRICES, PETROLEUM SECTOR, POLLUTION, POWER, PRICE ADJUSTMENT, PRICE ADJUSTMENTS, PRICE CHANGE, PRICE DIFFERENTIAL, PRICE FOR OIL, PRICE INCREASE, PRICE INCREASES, PRICE OF DIESEL, PRICE OF GASOLINE, PRICE REGULATION, PRICE SUBSIDY, PRICING MECHANISM, PRICING POLICIES, PRICING POLICY, PRIVATE SECTOR, PUBLIC TRANSPORT, REFINERY, REFINING, RETAIL, RETAIL PRICE, RETAIL PRICES, ROUTES, SAFETY, SAFETY STANDARDS, STOCK LEVELS, STORAGE FACILITIES, SURPLUS, TAX, TAX PAYMENTS, TRANSPORT COSTS, TRANSPORTATION, TRUE, WINDFALL PROFITS,
Online Access:	http://documents.worldbank.org/curated/en/2007/02/16259427/petroleum-prices-bangladesh-need-regular-appropriate-adjustments http://hdl.handle.net/10986/8054
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