Next Sri Lanka? Bangladesh's sharpest increase in oil prices since independence sparked protests

The Paper's reporter Wang Zhuoyi

On August 7, local time, demonstrations against oil prices rose for the second consecutive day in Dhaka, the capital of Bangladesh, and other regions. On the same day and night, some students were attacked by police during a demonstration in the Shahbagh area of Dhaka, injuring more than 20 people. The cause of this protest was that the Bangladeshi government unexpectedly raised fuel prices by about 50% on the 5th, which according to Indian media reports, this is the largest fuel price increase since Bangladesh's independence in 1971.

On the 8th, political organizations such as the Left Democratic Alliance of Bangladesh, which is composed of seven left-wing political parties, held a nationwide protest; On the 9th, bangladesh's largest opposition party, the National Party, will also hold protest rallies in various branches across the country.

"There is no choice but to raise the price"

On the night of August 5, the Bangladeshi government raised the price of all refined fuel oil products by 42.5 to 52 percent, according to Bangladesh's New Age and Daily Star newspapers. Among them, the price of octane increased by 51.7% to 135 taka (about 9.45 yuan) per liter, gasoline by 51.2% to 130 taka (about 9.1 yuan) per liter, and the price of diesel and kerosene also rose by 42.5%. The decision took effect at 0:00 a.m. on August 6.

According to India's Mint newspaper, the bangladeshi government's reason for the price increase is that the Russian-Ukrainian conflict is still continuing, and fuel price increases are inevitable given the current global market conditions. Bangladesh's Ministry of Electricity, Energy and Mineral Resources also noted that the state-run Bangladesh Petroleum Company lost more than Tk8 billion in oil sales in the six months to July.

On August 6, Nasrul Hamid, the country's minister of state for electricity, energy and mineral resources, said the government had "no choice" to raise prices, calling on the population to "be patient." He also said that if global energy prices fall, Bangladesh's domestic oil prices will adjust accordingly.

In response, a government official said that price adjustments were necessary, but he "never expected such a sharp rise."

Affecting people's livelihoods

Raising fuel prices could reduce the burden of subsidies on the state, but it would also further increase inflationary pressures. According to the Mint newspaper, Bangladesh's inflation rate has been above 6% for nine consecutive months, and in July, Bangladesh's inflation rate rose to 7.48%.

The sharp rise in oil prices has shocked the people of Bangladesh. Numerous videos circulating on social platforms show a large crowd of people crowding gas stations on the night of Aug. 5, scrambling to refuel cars or motorcycles before the price increases take effect.

According to the Dhaka Tribune, gas stations in some parts of Dhaka have also temporarily suspended operations, saying that they will resume operations after the price increases take effect.

In addition, it was reported that some buses in Dhaka also raised their fares on August 7. The Bangladesh Passenger Welfare Platform (BJKS) denied that the increase in bus fares was due to higher oil prices and demanded that the new bus fares must be implemented through a "proper cost analysis".

Bangladesh raised diesel and kerosene prices by 23 percent last November, sending transportation costs up nearly 30 percent, according to Mint.

According to the Dhaka Tribune, consumers served by the Dhaka Power Supply Company (Desco) experienced a 3-hour power outage on the 7th. According to previous reports, due to the high cost of diesel, Bangladesh has recently suffered from long power outages, sometimes up to 13 hours a day.

In addition to using fuel oil for transportation, Bangladeshi farmers also use diesel for example in agricultural irrigation. The Dhaka Chamber of Commerce and Industry (DCCI), Bangladesh's largest chamber of commerce, said in a statement that rising fuel prices would directly raise the cost of agricultural production, threaten food security and would also have a negative impact on the country's economy.

Student organizations and opposition parties protested

After the Bangladeshi government announced its decision to raise fuel prices, protests broke out across Bangladesh.

According to the "New Times" reported on August 8, Anik Roy, the central vice chairman of the Chhatra Union of Bangladesh, said that the police attacked students with batons in Shabaq, Dhaka on the 7th, causing about 25 people to be injured.

Moudut Hawlader, the head of the Shabaq police station, said they asked the students not to protest again, but the students' resistance sparked the incident. He also said police did not arrest anyone in the incident.

It is reported that during the demonstration, the students chanted slogans against the Bangladeshi government and Prime Minister Sheikh Hasina. They also blocked the Dhaka-Aricha road during the day's protests, causing a two-way traffic jam on the road that lasted more than an hour.

According to Bangladesh's Dhaka Tribune, on August 6, student organizations such as the Bangladesh Student Union held a protest demonstration at the National Museum in Shab'agh.

"Ordinary people are already struggling to cope with the rising cost of living, and the government's looting and mismanagement of public property has led to the suffering of the population." A protester told the Dhaka Tribune.

After the Bangladeshi government announced fuel prices, Mirza Fakhrul Islam Alamgir, secretary general of the main opposition Bangladesh Nationalist Party (BNP), accused the government's decision of "pouring salt on the wound" and would bring disaster to bangladesh's economy.

Leaders of nine left-wing parties also called on the government to withdraw its decision to raise fuel prices at a protest rally at the National Press Club in Dhaka.

According to the Mint newspaper, angry protesters across Bangladesh surrounded gas stations and demanded that the government withdraw its decision to raise prices.

Raise prices to meet IMF conditions?

According to previous reports, the Bangladeshi government applied for a $4.5 billion loan from the International Monetary Fund last month and asked the World Bank and the Asian Development Bank for $2 billion in budget assistance.

However, according to Agence France-Presse, although the Bangladeshi government has contacted IMF staff, the timing of the formal talks is still unclear because the IMF board is currently in adjournment.

Fuel prices in Bangladesh have been on the rise since last year, with the government providing huge fuel subsidies to ease the burden on consumers. However, according to the Daily Star, as Bangladesh's finances become increasingly stretched, huge subsidies are gradually becoming irrational. The IMF therefore recommended that the country cut fuel subsidies and limit the budget deficit to 5.1% of GDP.

M Tamim, a Bangladesh energy expert, told the Daily Star that the IMF "may play an important role" in raising oil prices in Bangladesh because the first condition for obtaining an IMF loan is not to provide any fuel subsidies.

According to the Mint newspaper, a Bangladeshi government official said it was unclear whether the government had raised fuel prices to meet IMF loan eligibility.

Zoanyed Saki, chief coordinator of the left-wing Party Ganosamhati Andolan, who protested in front of bangladesh's National Museum, argues that there is a direct causal link between meeting IMF loan conditions and the government's increase in fuel prices, and exacerbating livelihood distress. Saki also said Bangladesh's energy sector is "rife with corruption."

Responsible Editor: Zhang Wuwei Photo Editor: Le Yufeng

Proofreader: Yijia Xu