The commerce ministry has formed a committee that will recalculate the loss during processing and the bottling cost at the factories before fixing the price of edible oil.
The commerce ministry officials think that the price of edible oil in the local market might decrease a bit as a result of the initiative.
The ministry formed the 11-member committee headed by Additional Secretary (Import and Internal Trade) AHM Safiquzzaman at a meeting on Thursday. It will start inspecting the refineries from next Tuesday to confirm the actual rate of loss during processing and the cost of bottling.
The committee includes representatives from the Ministry of Commerce, Bangladesh Bank, National Board of Revenue, Institute of Cost and Management Accountants of Bangladesh, Bangladesh Trade and Tariff Commission, Department of Marketing at Dhaka University, TK Group, City Group, Meghna Group and Bangladesh Edible Oil Limited.
For the last 10 years, the commerce ministry has been fixing the price of soybean and palm oil by taking into account 4.25% loss during processing crude edible oil and 10% additional cost for bottling it as per the mill owners' information.
On condition of anonymity, a member of the committee told The Business Standard, "Since the refineries were using cutting-edge technology, there was no logical reason for the loss to be so high. We are hopeful that this will be significantly lower."
He also said the commerce ministry officials think that it is unreasonable to make the price of bottles 10% of the oil price.
Refinery owners, however, said they are not using recycled plastic bottles so the price of bottles is very high.
At yesterday's meeting, the mill owners also said the import cost of edible oil was calculated according to the interbank exchange rate given by the Bangladesh Bank and the Sonali Bank, but in reality the value of dollars is more than that. Currently, the interbank exchange rate is Tk86 per dollar, but they have to spend Tk88.
In addition to that, the mills have proposed to consider the increased salaries of refinery workers in determining the price of edible oil.
Professor Dr Zakir Hossain said, "There are many factors related to the pricing process. They are updated over time. It is not possible to determine the accurate price unless these updated factors are taken into account."
Additional Secretary (Import and Internal Trade) AHM Safiquzzaman said, "We have noticed that there is a scope of updating the oil pricing system, because different factors related to it have changed a lot since it was developed years ago."
"The prices of gas and electricity have changed during this time. The exchange rate for dollars has also risen. If the old pricing system is updated, we can adjust the price in a more coordinated way," said the additional secretary.
He said a uniform system based on the committee's recommendations will be developed for fixing the prices of edible oil and sugar.
At present the price of bottled soybean is Tk160 per litre. Over the last few months, the Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association has been proposing to the commerce ministry to increase the prices in the domestic market, citing rising prices in the international market. However, the Ministry of Commerce has not agreed to that.