Govt has tools to control fuel prices despite global surge: CPD

The government has policy instruments at its disposal to manage the domestic impact of soaring global fuel prices, researchers at the Centre for Policy Dialogue (CPD) have said, even as crude oil prices have crossed 100 dollars per barrel amid the ongoing conflict involving the United States, Israel and Iran.

CPD distinguished fellow Mostafizur Rahman made the remarks at a media briefing held at the think tank’s Dhanmondi office on Tuesday, titled “CPD’s Recommendations for the FY2026-27 Budget”.

Mostafizur explained that the government can use various policy levers to determine how much of the international price increase is passed on to domestic consumers.

He noted that apart from the profit margin of Bangladesh Petroleum Corporation, approximately 20 to 25 percent in various taxes are levied on fuel in the country. When global prices rise, the government can reduce these taxes to keep domestic prices in check.

He cited the recent removal of a 2 percent advance income tax on fuel imports that had been in place during the previous interim government as an example.

However, Mostafizur pointed out a critical structural weakness in Bangladesh’s energy security. The country lacks a permanent strategic fuel reserve, unlike neighboring nations. Such reserves provide market stability during crises.

He said panic buying is currently driving consumers and dealers to stockpile fuel beyond actual needs, creating artificial demand that is difficult for any country to meet instantly. Restoring market confidence is therefore essential, he said.

Mostafizur added that the government is taking several steps to manage the situation, including spot purchases on the open market, reactivating a pipeline agreement with India for diesel imports, and exploring alternative supply sources such as Malaysia.

He stressed that while ensuring fuel availability is the primary objective, the government must also ensure that purchasing fuel at elevated prices does not place excessive strain on foreign exchange reserves. He suggested that the Islamic Development Bank could be approached for concessional loans for fuel imports.

He emphasized that protecting reserves is critical since food security and fertilizer imports also depend on them.

He called for a short-term coordinated plan to manage the immediate crisis alongside a medium-term strategy to build a strategic petroleum reserve that would provide market assurance and prevent panic buying in the future.

CPD Executive Director Fahmida Khatun said the country faces significant domestic and external challenges that demand precise and strategic policy responses.

She said macroeconomic stability should be the top priority for policymakers, requiring targeted initiatives to control inflation, bring fiscal discipline, boost investment and generate employment.

Fahmida noted that the upcoming FY2026-27 budget will be the newly elected BNP government’s first and represents an important opportunity to begin delivering on electoral promises while demonstrating effective leadership in revenue management and public spending efficiency.

She added that alongside achieving economic stability to navigate current turbulence, the government must continue reform efforts to strengthen the economy’s long-term foundations.

CPD Research Director Khondaker Golam Moazzem was also present at the briefing.