People suffer for rapid rise in fuels, power prices

by Manjurul Ahsan

2_1Rapid increase in the prices of fuels and electricity between March 2010 and March 2014 has enormously burdened people by pushing up their cost of living.
Experts said the rise in fuel and power prices had a cascading effect on the cost of living as people have to buy them at a higher rate and it increased the cost of production and transportation forcing people to buy commodities and services at a higher price.
In a litany of reactions, each time the prices of fuels were increased, buses, pick-ups, and auto-rickshaws have increased fares, rickshaw-pullers used that as an excuse for doubling their asking rate, rickshaw vans also followed suit, and vegetable vendors raised prices on the ground of increased transport cost.
People have been facing similar chain effects in transport fare and house rents and the prices of other goods and services immediately shot up after the authorities concerned increased the prices of fuels and power.
Bangladesh Institute of Development Studies research director Zaid Bakht told New Age that the price hike of fuels and electricity increased the cost of production, both agricultural and industrial.
Economist and rights activist, Anu Mohammad said, it had affected the living standard of lower- and middle-income people through a drop in buying capacity.
2_2He said, ‘Now it should be assessed how many people went bellow the poverty line through losing their purchasing capacity after the rise in the prices of essentials.’
According to the data available with the Bangladesh Bureau of Statistics, the general index of the consumer price index or CPI rose to 198.54 per cent in February 2014 which was 141.18 per cent in 2009-10 financial year.
Consumer price index or CPI is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. Changes in CPI are used to assess price changes associated with the cost of living.
The BBS considered 2005-06 fiscal as base year.
The food index rose to 214.17 per cent in February 2014 which was estimated at 149.40 per cent in 2009-10 fiscal. Similar impact was seen in the non-food index.
The Awami League-led government, during its immediate past tenure, increased the prices of all types of fuel oils including furnace oil, diesel and kerosene.
The price of diesel and kerosene was increased by 54.55 per cent, up from Tk 44 per litre to Tk 68, in five phases between May 6, 2011 and January 4, 2013.
The price of furnace oil was increased by 130.77 per cent, up from Tk 26 per litre to Tk 60, in six phases between January 24 and December 30 of 2011.
The price of CNG or compressed natural gas was increased by 79.10 per cent, from Tk 16.75 per cubic metre to Tk 30, in two phases in 2011.
The Awami League-led government in its two consecutive terms have increased retail power prices by 63.56 per cent, up from Tk 3.76 a unit to Tk 6.15 on an average, in seven phases between March 2010 and March 2014.
It has increased the prices of electricity by between 61.2 per cent and 89.14 per cent for different categories of domestic consumers, which is over 30 per cent for irrigation pumps, 84.58 per cent for small industries, 78.74 per cent for medium industries and between 159.2 per cent and 225.88 per cent for the heavy industries, according to the data available with the Bangladesh Energy Regulatory Commission.
The rapid rise in the prices of fuels and power was instigated by the government’s decision to increase electricity purchase from expensive rental power suppliers since 2010 as most of the rental plants ran on diesel and furnace oil, officials said.
The government increased the price of CNG to rationalise the prices with diesel and octane, they said.
2_3The annual subsidy requirement for fuel oils was increased due to additional import of diesel and furnace oil by between 10 lakh and 12 lakh tonnes a year to feed the short-term rental plants, the officials said.
Similarly, the government subsidy in buying electricity from the rental suppliers was increased for additional payment in rent of the plants to the private companies, they said.
Zaid said the government had to raise the prices of fuel oils and power to reduce budgetary deficit.
Anu, however, said the government was increasing the prices of fuels and electricity to make the sectors profitable for private entrepreneurs.
He said it was longstanding demand of some global agencies like the International Monetary Fund and a section of local and international business groups.
Common people of a poor country like Bangladesh were paying the prices to enable the private sector to make profit, he said.

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