The government’s decision to raise fuel prices was driven by mounting import costs and the growing disparity between domestic and regional prices, which the government said was increasing the risk of cross-border smuggling.
State Minister for Power, Energy and Mineral Resources Aninda Islam Amit said the government had postponed the adjustment despite mounting losses at the Bangladesh Petroleum Corporation (BPC), but could no longer sustain the financial burden as international oil prices, shipping charges and marine insurance costs continued to rise.
“The government did not want to take such an unpopular decision unless there was no alternative,” Amit told reporters at the Secretariat on Sunday.
He said the continuing conflict in the Middle East had added to the cost of importing petroleum products, with both fuel prices and the cost of transporting cargoes rising.
“The crisis is taking a new turn almost every day, making fuel imports increasingly expensive for Bangladesh,” he said.
Amit said BPC had absorbed substantial losses in recent months because domestic prices were not adjusted in line with international market conditions.
The corporation lost about Tk22,875 crore between March and August 2026, according to figures presented by the minister. That translates into an average monthly loss of roughly Tk3,813 crore.
Bangladesh imports approximately 7 million tonnes of petroleum products annually, of which around 4.5 million tonnes are diesel, he said.
Before the latest adjustment, diesel was sold domestically at Tk115 a litre, while its international equivalent was about Tk170, leaving BPC to absorb a difference of roughly Tk55 a litre.
Even following the price increase, the corporation would still effectively bear around Tk15 a litre in subsidy on diesel, Amit said.
Had prices remained unchanged, the annual subsidy or loss on diesel alone could have reached about Tk40,000 crore, while the combined figure for petroleum products could have risen to around Tk50,000 crore, he said.
The minister said maintaining subsidies on that scale would increasingly constrain government spending on social protection and essential public services.
He specifically mentioned allowances for widows and people with disabilities, free medicines at public hospitals, the Expanded Programme on Immunisation and the proposed family-card scheme for low-income households.
Under the proposed family-card programme, eligible economically vulnerable families would receive Tk2,500 a month, Amit said.
The government is also concerned about the price gap with other countries, which it says could encourage fuel purchased in Bangladesh at subsidised rates to be taken across the border.
Amit cited diesel prices of about Tk134.76 a litre in Kolkata, Tk164.38 in Myanmar, Tk161.24 in Nepal, Tk179.42 in Sri Lanka, Tk151.22 in Thailand, Tk137 in Vietnam, Tk140 in the Maldives, Tk168.53 in the Philippines, Tk185.48 in Pakistan and Tk122.79 in the UAE.
With Bangladesh selling diesel at a substantially lower price than several neighbouring markets, the country faced a heightened risk of fuel being smuggled out, he said.
“This created a major risk of smuggling fuel purchased with the hard-earned foreign currency of our expatriate workers to neighbouring countries,” Amit said.
Bangladesh spends substantial amounts of foreign currency to purchase petroleum products from overseas markets. The minister argued that maintaining significantly lower domestic prices could therefore result in foreign exchange being used to finance fuel that is ultimately consumed outside the country.
He said the latest adjustment was intended to address both BPC’s growing financial losses and the risk of subsidised fuel being diverted across the border.
The government must strike a balance between fuel subsidies and expenditure on social protection and other essential services, Amit said.
He acknowledged that the price increase was unpopular but urged the public to consider the economic pressures behind the decision.
The adjustment comes against a backdrop of continued volatility in global energy markets following the escalation of the Middle East conflict.
The security situation around key shipping routes, including the Strait of Hormuz and Bab el-Mandeb, has added to concerns over fuel supplies and pushed up shipping and insurance costs, increasing the financial burden on countries such as Bangladesh that rely heavily on imported petroleum.