Twenty taka of honesty
While I am writing this and until it gets published, diesel, kerosene, petrol and octane cost 20 taka more. Diesel goes to 135 taka, petrol to 160 taka, octane to 165 taka. By tomorrow afternoon bus fares will be argued over at every counter, and by the weekend the vegetable seller will be blaming the truck.
The anger is fair. The government got this one right. My complaint is that it took so long.
Look at what the waiting cost us. The war on Iran began on 28 February 2026, and crude went from around 8,600 taka (US$70) a barrel to as high as 14,300 taka (US$116). The Strait of Hormuz, which carries roughly a fifth of the world's traded oil, turned into a gamble. At the beginning of March we had nine days of diesel in the tanks. People queued for hours, and some pumps ran dry by midday.
In April the AP met a 53-year-old ride-share rider in Dhaka, a father of four, who was losing working hours to the petrol queue. Garment factories, short of power and burning diesel in generators, ran at 40 to 50 percent capacity. That is what "protecting the consumer" looked like on the ground.
And it wasn't free. 5,000 crore taka went on subsidy in March alone. The finance minister told parliament the war had added 36,000 crore taka to the energy subsidy bill. Between March and August, BPC lost nearly 22,900 crore taka. It still loses about 89 taka per liter of diesel, roughly 109 crore taka a day.
It has some 12,400 crore taka left in the bank, enough for September's imports and maybe not October's. Meanwhile, Brent, which had slipped back to about 8,600 taka (US$70) by July, was at 13,400 taka (US$109) again by early September after fresh attacks on shipping. By this week, the choice was costly fuel or no fuel.
None of this is new. In 2008, the ADB found that the state was quietly paying about 36 taka (US$0.52) per liter of diesel and warned that BPC would lose roughly 7,500 crore taka (US$1.1 billion) that year, at the exchange rate of the day. In November 2021, diesel went from 65 taka to 80 taka in one go, and bus fares followed.
In 2022 the then government sat on prices until BPC had bled about 8,000 crore taka in six months, then raised petrol and octane by more than 50 percent overnight. When world oil collapsed after 2014 we saw almost none of it at the pump, and BPC made about 42,000 crore taka in profit between FY15 and FY21.
It was still in profit last fiscal year, by 4,216 crore taka. We have never really had a subsidy policy. We've had a popularity policy, where prices freeze when it suits the people in power and explode when the bill arrives.
The formula adopted in March 2024 under the IMF programme was supposed to end that. When prices moved a taka or two a month nobody rioted. Then the Iran-US war happened, and a government barely ten days old did what other governments would have done: it froze prices.
The IMF had asked in January for the formula to be applied consistently. But the government waited until Brent had already fallen from nearly 14,800 taka (US$120) to 11,100 taka (US$90), and then raised prices anyway, handing the opposition an easy line about hiking fuel while the world got cheaper. Diesel was then left untouched for five months. Now, a Sunday night shock. The direction is right. The manner is the same old habit, and you take the political beating either way.
Why is the direction right? Cheap fuel is a badly aimed gift. The man with two cars in Gulshan collects far more of it than the farmer running a shallow pump, and this isn't my guess. IMF researchers who pooled household surveys from developing countries found the richest fifth get about six times as much from fuel subsidies as the poorest fifth. For petrol, more than 80 percent of the benefit lands with the richest 40 percent.
By their sums, getting 1 taka to a poor family through cheap petrol costs the treasury about 33 taka. It escapes in other ways too. The ministry itself says our neighbours pay much more, which is an open invitation to smugglers. One economist told The Daily Star in April that artificially low prices tend to bring shortages, queues and black markets. We have lived all three this year.
Then there is what the money could do instead. Today's hike should cut BPC's losses by about 10,000 crore taka a year. One estimate puts this year's extra fossil fuel bill at up to 34,400 crore taka (US$2.8 billion), about what 8 GW of rooftop solar would cost, on a grid of 32 GW where renewables still supply barely 5 percent of our electricity.
A price that tells the truth pushes people toward fuller buses, fewer wasted trips and solar pumps, and it makes every one of those investments pay back sooner. Even here the state pulls against itself. CPD found in June that imported LNG carries a tax load of 9.5 percent while solar equipment pays around 31 percent and electric vehicles about 70 percent.
Honesty has to run both ways, though. A Dhaka Tribune analysis in May put the import cost of octane at about 106 taka a liter when it was selling at 140 taka, with 27.57 taka of the gap going to duties, VAT, surcharges, transport and the state distributors' margins. Not long ago, duties and taxes made up roughly a third of the price of diesel and octane.
The Centre for Policy Dialogue's (CPD) 2024 review of market-based pricing flagged that the formula doesn't show a clear breakdown of its parts. If we are asked to pay the real price, publish the real arithmetic every month, tax and all.
And the government only wins this argument if it does the second half of the job. Inflation was 8.26 percent in August, with non-food prices rising at 9.32 percent, and that was before tonight. Diesel is not a rich man's fuel. It runs irrigation pumps, buses and trucks, and the World Bank cautioned in the spring that higher fuel prices could hurt farmers.
Financial experts have suggested that cash transfers or vouchers for less privileged households work better than blanket subsidies. South Korea sent energy vouchers to 1.2 million underprivileged households. Indonesia paired its fuel price rises with cash payments to low-income families.
We already send allowances through bKash and Nagad, so the pipes exist; let's use them. Get a diesel card to farmers before the boro season. Police the bus fare chart. And when oil falls, cut the price the same week, without being asked.
Twenty taka hurts. An empty pump hurts more.
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Zulkernain Saer is an investigative journalist