Due to the large difference in the price of diesel in Bangladesh with the neighboring countries, smuggling is taking place freely. Fuel oil bought in foreign currency is being smuggled to other countries.
Despite the fact that smuggling has been happening in the border areas for a long time, there is very little precedent for preventive measures. Concerns are increasing in the concerned circles.
Experts said that the smugglers are active in the opportunity of the large difference in the price of fuel oil in the country’s market with neighboring countries. For this reason, they suggest setting the price in line with the bordering countries.
Diesel is selling at Rs 92.76 per liter in Kolkata, India on Monday (January 29). The price of diesel per liter in Bangladeshi taka is 123 taka. Diesel price in Chennai is Rs 94.24 per litre. The price of diesel per liter in Bangladeshi taka is 125 taka. Diesel is selling at Rs 94.33 per liter in Mumbai, which is Rs 125 in Bangladeshi taka. Currently, the price of diesel per liter in Bangladesh is Tk 109.
In this situation, the difference in the price of diesel with different states of Bangladesh and India stands at 14 to 16 per liter. Due to this huge price difference, diesel is being smuggled from Bangladesh to neighboring countries. A huge amount of foreign exchange is being wasted in this, the pressure is increasing on the reserves. On the other hand Bangladesh Petroleum Corporation (BPC) is struggling to import fuel oil due to foreign exchange crisis.
Experts say, because the automatic pricing formula of fuel oil is not in operation with the international market and pricing is done by assessing the duty on the fuel oil tariff value, the price difference with the neighboring countries is mainly due to this difference. The existing pricing formula will never prevent oil smuggling. Therefore, to prevent oil smuggling, they say there is no option to determine the price by assessing the duty on the invoice value.
Those concerned with the sector say that when we do LC, the private banks take the value of the dollar at the rate of 110 taka, but they have to pay 123 taka while making the payment. In this, the importers of private fuel oil raw materials have to pay an additional 13 taka per dollar. BPC levies tariffs on fuel imports at tariff value ($40 per barrel), more than double what the private sector has to pay.This is increasing the VAT-tax of private oil importers, which is in conflict with the free market economy.
Economists and energy experts say that there is already a dollar crisis in the country. In this situation, if the oil is smuggled, this crisis will be more intense. Because BPC has to import additional fuel oil to meet the demand. So the price of diesel should be balanced with neighboring countries. Failure to do so will not prevent diesel smuggling in any way.
Ahsan H. Mansoor, Executive Director of Research Institute Policy Research Institute (PRI), said that the dollar is associated with oil. Because the demand for oil increases, the dollar is under pressure. There were always allegations of oil smuggling in Bangladesh. This complaint will remain if the prices are not set in line with the neighboring countries. Taking into account the critical situation of the dollar, it is important to determine the price of fuel oil in accordance with the international market and neighboring countries.
He also said that it is best to introduce automated pricing system quickly. If this is done then the international market rate system will come into effect. Also there will be no risk of smuggling.
Energy expert Professor Dr. Ijaz Hossain said that fuel oil smuggling has been going on for a long time. Earlier it used to be less, now oil smuggling at land ports has increased a lot. If the government wants to, it can check the fuel of the goods trucks when they go and come.Another solution can be adjustment of fuel oil prices in the international market. It was supposed to be done by the government, but has not been done so far. Due to these reasons, the price of fuel oil needs to be quickly adjusted to the international market.
According to BPC sources, currently the demand of fuel oil in the country’s market is about 75 lakh metric tons. Among them, only diesel demand is 50 lakh metric tons. In the last financial year 2022-23, the government had to spend five billion foreign currency on the import of fuel oil. A huge amount of dollars is going to import fuel oil.
How diesel is smuggled:
Border district and port representatives said that more than a thousand cargo trucks are coming to Bangladesh with goods from neighboring countries every day through various land ports. They are entering Bangladesh with little oil on arrival. And returning with full tank. Apart from this, experts are afraid of oil smuggling through unguarded borders and sea routes. Apart from this, there is oil smuggling by smugglers across the border. The government is also worried about the issue of fuel oil smuggling amid the foreign exchange crisis.
