Year-on-year fuel import spending jump by 230%

The government spent 230% more, $359.93 million to be exact, in October for fuel import compared to $108.97 million in the corresponding period last year, according to the latest Bangladesh Bank data.

The government's expenditure last month in letter of credit (LC) settlement for fuel is also 87.43% higher compared to $192.03 million in September this year, according to the central bank's LC opening and settlement data.

Stakeholders say the expenditure in LC settlement for fuel increased mainly due to a volatile global market. Besides, fuel-consumption returned to pre-pandemic level as Covid-led movement restrictions were eased up, contributing to the spiking fuel import.

In October last year, per barrel of crude was around $35, which reached $75.85 this October, as per Bloomberg OSD LLC.  The global fuel price also jumped to $95 per barrel at the beginning of this month. 

"The import expenditure increased mainly because of the abrupt fuel price hike in the global market," said Syed Mehdi Hasan, director (operations and planning) at Bangladesh Petroleum Corporation (BPC). 

Sources at BPC said during the Covid-19 outbreak last year, the consumption of different types of fuel was only 8,000 to 9,000 tonnes per day. Now, the daily consumption of fuel has reached around 17,000 tonnes.

Following the volatile energy price in the global market, the Bangladesh government hiked the diesel and kerosene prices by 23% to Tk80 per litre to adjust the losses that Bangladesh Petroleum Corporation, the sole fuel importer of the country, had been incurring to sell fuel oil at subsidised rates.

The central bank data also shows that Bangladesh's imports amounted to $10.84 billion in July-August this year, while exports were $6.73 billion, leading to a crisis of dollars.

The Bangladesh Bank bought a record $8 billion in the fiscal 2020-21 amid low imports and high inflows of remittance. However, till 20 November this fiscal year, the central bank has sold almost $2 billion to banks.

Riding on the largest shipments made of apparel goods, Bangladesh recorded its highest ever single-month export earnings of $4.16 billion in September.

The earnings were 37.99% higher than the $3.01 billion registered in September last year, according to provisional data of the Export Promotion Bureau (EPB) released Sunday.