Jet fuel price reduced by Tk5 per litre

The Bangladesh Petroleum Corporation (BPC) reduced the jet fuel price by Tk5 per litre on Thursday.

The price of jet fuel has been reduced from Tk130 to Tk125 for domestic routes and 96 cents for international routes, which was earlier $1, which will be effective from Friday.

Domestic airlines do not consider the price reduction adequate.

Mofizur Rahman, secretary general of Bangladesh Aviation Operators Association of Bangladesh (AOAB), a coalition of domestic aviation operators, said, "Tk1-reduction per litre of jet fuel means a lot to us but this time the price has not been reduced but adjusted with the price which was unjustifiably increased by Tk5 recently."

"As there was pressure from us, they reduced the price as routine work. It does not fulfil our expectations as we suggested a price adjustment in line with the international market, which was not done," he added.

Two years ago, jet fuel was priced at Tk46 per litre. Due to the impact of Covid-19 and the Russia-Ukraine war, the price of fuel continued to rise to Tk130 per litre, an increase of 127%.

On 6 November, AOAB gave three proposals to the Minister of State for Power, Energy and Mineral Resources Nasrul Hamid to solve this problem – approval of the direct purchase of fuel from Pertex Petroleum for domestic private sector airlines and helicopter operators; allowing import of jet fuel from abroad at competitive prices if necessary; domestic fuel prices are adjusted to international flight fuel prices.

The AOAB also claimed that jet fuel for domestic flights in Bangladesh is being purchased at 30-40% higher price than the international market price and the aviation sector is facing a crisis of existence due to overpriced jet fuel in Bangladesh.

Jet fuel is usually imported by Bangladesh Petroleum Corporation. Padma Oil Limited supplies it exclusively to airlines. Private company Pertex Petroleum has recently started producing jet fuel as the first Bangladeshi company. The company will produce 2,800 barrels of jet fuel per day.

According to the airlines, the country has a daily demand of nine thousand barrels of jet fuel.

Airlines said the overvaluation of domestic fuel has pushed airline ticket prices beyond the reach of passengers. As a result, passenger numbers fell by a third of normal demand. As a result, the total tax collection of the government will reduce by approximately Tk7.20 crore per month.