Bangladesh has reduced the price of furnace oil by Tk 4.44 per litre, around six weeks after imposing a sharp increase, while leaving the prices of other petroleum fuels unchanged for July.
Under a new order issued by the Bangladesh Energy Regulatory Commission (BERC) on Tuesday, the price of furnace oil has been cut from Tk113.54 to Tk 109.10 taka per litre. The revised rate will take effect from midnight.
Furnace oil is the country’s most widely used fuel for electricity generation, with around 2 million tonnes consumed annually by power plants.
The previous price revision came into effect on 18 May, when the price was increased from TK 94.69 to Tk 113.54 per litre. That followed another rise in the previous month, when the price had already been raised by Tk 24.59 per litre.
Under the previous government, the Bangladesh Petroleum Corporation (BPC) set furnace oil prices directly, bypassing the energy regulator.
After the interim government took office, a gazette notification issued on 15 September transferred authority for setting the prices of furnace oil and Jet A-1 aviation fuel to BERC. Following a public hearing in January, the regulator announced its first furnace oil tariff on 22 February.
Fuel prices unchanged for July
Despite a decline in international oil prices, Bangladesh has decided to leave retail prices of other petroleum products unchanged for July.
The government has kept fuel prices unchanged for July, maintaining diesel at Tk 115 per litre, kerosene at Tk 135, petrol at Tk 140 and octane at Tk 145.
The July pricing order was issued on Tuesday.
The last revision, announced on May 31, kept diesel prices unchanged but increased kerosene, petrol and octane by Tk 5 per litre each.
Before that, on April 19, the government introduced a substantial increase in fuel prices, raising diesel from Tk 100 to Tk 115 per litre, petrol from Tk 116 to Tk 135, and octane from Tk 120 to Tk 140.
International market and pricing formula
Global oil prices surged during the recent conflict involving Iran, pushing Brent crude above US$115 a barrel from around US$72. Brent reached a record US$137.64 a barrel in March 2022, while its recent low was around US$50 during the pandemic period.
Bangladesh introduced an automatic fuel pricing mechanism through a gazette notification on 29 February 2024, under which domestic fuel prices are intended to be adjusted each month in line with international market movements.
The formula keeps the commissions payable to BPC and other stakeholders unchanged, while allowing the import cost component to rise or fall with global prices. However, implementation has not always followed the formula strictly. Although international prices have eased recently, domestic retail prices have not fallen proportionately.
According to BPC, the company incurred significant losses over recent months and is seeking to recover part of those losses before passing on further reductions to consumers. Officials say additional price cuts may be considered if international prices continue to decline.