Fuel prices hiked by Tk20 per litre
The new prices will be effective from Monday.
Highlights:
- Fuel prices rise Tk20 per litre from Monday
- Diesel rises 17.4% to Tk135 per litre
- Octane rises 13.8% to Tk165 per litre
- Petrol rises 14.3% to Tk160 per litre
- Kerosene rises 14.8% to Tk155 per litre
- BPC incurred Tk22,875.66cr losses since March
- Fuel hike aims to reduce BPC losses, save foreign currency, smuggling
- Experts warn of wider inflationary pressure
- Higher fuel costs to hurt industries and exports
- Fuel hikes may increase transport and food costs
The government has increased the retail prices of diesel, octane, petrol, and kerosene by Tk20 per litre, with the revised rates set to take effect from Monday (21 September).
With the new price adjustment, this is the second time the BNP government has hiked fuel prices after assuming power in February this year. The last price hike was back in April.
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Under the revised rates, the price of diesel has been raised to Tk135 per litre from Tk115, marking an increase of Tk20, or 17.4%.
The price of octane has been increased to Tk165 from Tk145, also a Tk20 hike, equivalent to 13.8%.
The price of petrol has been raised to Tk160 per litre from Tk140, an increase of Tk20, or 14.3%.
Meanwhile, from tomorrow, kerosene will cost Tk155 per litre, up from Tk135, marking a Tk20, or 14.8%, increase.
The Energy and Mineral Resources Division issued a gazette notification on Saturday night (20 September), revising the consumer-level selling prices of the four petroleum products.
Why the hikes
Laying out the perspective and rationale of the latest fuel price hike, the energy division said, "The ongoing war in the Middle East has caused a significant increase in the international prices of all types of petroleum products and freight charges since March 2026, and the upward trend continues."
Although international fuel prices have more than doubled, the government refrained from increasing domestic fuel prices in the public interest since April. As a result, the Bangladesh Petroleum Corporation (BPC) incurred losses of approximately Tk22,875.66 crore between March and August this year.
On 18 April, the government had increased the price of diesel by Tk15 per litre to Tk115. Despite the abnormal rise in international prices, domestic fuel prices remained unchanged for the following five months. Fuel prices in neighbouring and other Asian countries are currently considerably higher than in Bangladesh, said the energy division.
Giving a comparative price-sensitive analysis with India and other Asian countries, it said diesel is priced at Tk134.76 per litre in Kolkata, India; Tk164.83 in Myanmar; Tk161.24 in Nepal; Tk179.42 in Sri Lanka; Tk151.22 in Thailand; Tk137 in Vietnam; Tk140.71 in the Maldives; Tk168.53 in the Philippines; Tk185.48 in Pakistan; and Tk144.79 in the United Arab Emirates.
"The relatively low domestic fuel prices have created a risk of fuel being smuggled to neighbouring countries. The smuggling of petroleum products purchased with foreign currency earned through the hard work of Bangladeshi expatriates is not acceptable," said the division.
The government is also providing substantial subsidies to keep electricity and gas supplies uninterrupted amid the impact of the war on the LNG market.
In this context, the energy division said there is no alternative to increasing fuel prices to sustain the government's social safety net programmes and prevent fuel smuggling.
At current international market prices, BPC is incurring a loss of approximately Tk89 per litre on diesel. This translates into a daily loss of around Tk109 crore. At this rate, the annual loss on diesel alone would reach approximately Tk40,000 crore.
According to the energy division, increasing domestic fuel prices by Tk20 per litre, in line with prices in neighbouring countries, would reduce BPC's annual losses by around Tk10,000 crore.
Against this backdrop, the division said it has revised the prices of petroleum products to reduce BPC's losses, save foreign currency, and mitigate the risk of fuel smuggling to neighbouring countries amid the rise in international fuel prices caused by the ongoing war in the Middle East.
Fears of wider economic pressure
Talking to The Business Standard tonight, Dr Fahmida Khatun, distinguished fellow at the Centre for Policy Dialogue (CPD), said that the latest price increase seems to be another adjustment to a continuing external energy-price shock.
"Nevertheless, increasing all major petroleum prices by the same absolute amount at once is a substantial policy intervention, especially when inflation and household financial pressure are already high," she said in her immediate reaction.
"The increase will have wide-ranging consequences. Individuals will face higher expenses for transportation. Even households that do not purchase fuel directly will be affected as transportation costs raise the prices of food and other essentials.
"Poor and lower-middle-income families will suffer disproportionately because most of their income is spent on daily necessities," she added.
Fahmida continued, "Diesel-dependent agriculture will face higher irrigation, mechanisation and transportation costs. This could potentially raise food prices, but reduce farmers' returns."
Around 70% of the country's irrigation pumps are operated using diesel. A research paper published by researchers from Bangladesh Agricultural University (BAU) and the Bangladesh Rice Research Institute (BRRI) found that irrigation is one of the major components of the total input or production costs for Boro rice, accounting for 20–25% of the total expenditure.
Fahmida also said, "Industries will incur higher logistics and generator costs, which will weaken profitability and export competitiveness. Small businesses will be especially vulnerable.
"At the macroeconomic level, the increase may intensify inflation, reduce household consumption and weaken growth."
Since the government had no other option but to increase energy prices, it should monitor how this increased price is imposed on the common people by market players, the economist stressed.
"The government should publish the price calculation transparently, prevent excessive fare increases and market manipulation. The government should also provide targeted support to low-income households, small farmers and public transport users," she added.
Anwar-ul Alam Chowdhury Parvez, president of the Bangladesh Chamber of Industries, told TBS, "The country is experiencing high inflation that is not coming under control. Industries are not getting adequate gas and electricity, resulting in very low private-sector credit growth.
"At such a time, increasing fuel prices by more than 15% without consulting anyone will create additional pressure across all sectors."
He said the decision will increase industrial production costs, transportation costs, and inflation. "The prices of goods will become uncontrollable. People will lose their jobs, while many businesses will have to scale back their operations.
"Non-performing loans in banks will increase. The government will not be able to create the employment it has been promising," he opined.
He feared that such decisions by the government will erode public confidence in the BNP administration. "Overall, it will create a socioeconomic crisis."
Talking to TBS, Bangladesh-Thai Chamber of Commerce and Industry (BTCCI) President Shams Mahmud said, "As it is, all forms of business activities, including manufacturing, logistics, agro, service sector, and FMCG [fast-moving consumer goods], are going through stress in these turbulent times. International energy markets have recently been affected by the strikes in Saudi Arabia by Houthi rebels. Just today, Saudi Arabia said next month's shipment of oil to Europe will be withheld.
"So we can anticipate future price increases. The government has taken the right decision as a policy to create a buffer for any price shock, especially in regards to sourcing and also subsidy."
"But unfortunately, this will add a burden to the business ecosystem of Bangladesh, with inflationary pressure on the internal economy reducing disposable income. For export-oriented industries, which are already in a vulnerable state with decreasing competitiveness, it will add to the already increasing cost of doing business," said the businessman.
Also, the International Monetary Fund has been pressuring the government for a reduction of subsidy, and it may also have had an influence on the decision, as both parties will sit in Bangkok next month to work out the next loan from the global lender, he added.
