The government weighed down by a heavy burden of subsidies has hiked fuel prices effective from Tuesday, reports bdnews24.com

In a statement Monday, the energy ministry said octane will cost Tk 90 per litre, up Tk 23 from Tk 67; petrol Tk 87, up Tk 22 from Tk 65; and diesel Tk 55, up Tk 15 from Tk 40.

"We had no alternative to hiking fuel prices due to an abnormal rise on the global market," the chief adviser's special assistant M Tamim, who oversees power, energy and mineral resources ministry, told bdnews24.com.

The government also raised the prices of kerosene to Tk 55 from Tk 40 per litre and the prices of liquefied petroleum gas to Tk 1000 from Tk 600 a cylinder. Furnace oil has been re-priced at Tk 30, up Tk 20 from Tk 10 per litre.

The government had earlier increased fuel prices on April 2 last year.

The energy ministry said the price hike would cut projected losses in the sector to Tk 10,000 crore from Tk 17,000 crore in fiscal 2008-09.

Fuel prices on the international market were $60 a barrel when the government last hiked energy prices in Bangladesh. Crude oil prices neared $144 a barrel on the world market.

State-owned Bangladesh Petroleum Corporation was hardest hit by rising fuel prices on the international market, which increased the amount of subsidies.

The BPC sought Tk 7,000 crore from the government in June to finance its deficit.

BPC owed local banks Tk 3,200 crore until May. In the outgoing year, BPC ran a deficit of Tk 3,500 crore.

The government last year repaid Tk 5,700 crore in BPC liabilities to different local banks through bonds. Besides, Tk 200 crore was paid in cash.

According to the BPC, the government paid Tk 35 in subsidy for diesel and Tk 34 for kerosene a litre. The government also subsidised petrol and octane.

In an analysis, the communications ministry said the fare per passenger per kilometre stands at Tk 1.05, with diesel prices fixed at Tk 55.

In freight of goods, fuel accounts for 32 percent to 40 percent of the total cost.

The costs of transporting goods per tonne will rise by 12-15 percent because of the hike in diesel prices.

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