Kerosene, diesel to no longer cost the same

Kerosene and diesel will no longer cost the same, as per a new fuel pricing formula introduced by the Energy and Mineral Resources Division today.

As per the formula, Bangladesh Petroleum Corporation's (BPC) administrative costs and Eastern Refinery's fuel processing costs have been kept "variable", which may slightly increase prices in the future, according to officials concerned.

Earlier, the costs were fixed at Tk 1.06 and Tk 1.53 respectively whereas from now those would be calculated based on the actual cost incurred.

In addition, the government has imposed a 15 percent VAT on the fuel handling commission at jetties and increased the financial charge to 13.25 percent from 9 percent, which may also impact prices of key fuels—octane, petrol, kerosene and diesel.

The ousted Awami League government had introduced an automated pricing formula in March 2024 and the interim government followed it till this month.

Currently, the price of diesel and kerosene is Tk 104 per litre while octane Tk 125 and petrol Tk 121.

As per the new formula, kerosene would cost Tk 117, if other variables remain the same.

The new VAT and administrative expenses will come into effect next month and the prices will vary by very small margins, a top BPC official told The Daily Star.

The Centre for Policy Dialogue had several times stated fuel prices could be reduced by Tk 10 to Tk 15.

But Fouzul Kabir Khan, the adviser to the Ministry of Power, Energy and Mineral Resources, in August last year said the previous mechanism made it tough to reduce the price of diesel even by Tk 1.

Earlier, the prices of kerosene and diesel were kept the same to prevent adulteration.

The new formula determines the price of kerosene in the same manner as that of octane and petrol. However, to prevent adulteration, kerosene would be Tk 4 less than the price of petrol.

Use of kerosene has dropped for the non-stop and countrywide availability of electricity and an increase in the use of liquefied petroleum gas, said the Energy and Mineral Resources Division.

As per the previous formula, the fuel handling commission was Tk 100 per tonne. Now the government would take a 15 percent VAT.

However, Hafizur Rahman Chowdhury, joint secretary (operation-1) to the division, said the government was already charging VAT at the new formula's rate.

The bank charge has increased form 9 percent to 13.25, which has been incorporated in the new formula. He asked to contact the BPC for further queries.

The Daily Star tried to contact BPC Chairman Amin Ul Ahsan several times over the phone. He was unavailable.