Traders propose raising oil prices by Tk5 per litre

Traders have proposed a further increase in prices of soybean oil and palm oil by Tk5 per litre due to the rise in international market prices.

At a meeting at the Bangladesh Trade and Tariff Commission on Wednesday, they discussed the proposal with the national price monitoring and determination committee. However, no decision was reached at the meeting.

The committee will decide after further observations of the international market and pricing situation.

On 17 February, for the first time in the country the committee set the maximum prices of oil, following which non-bottled soybean oil is now sold at Tk115 per litre, bottled soybean oil at Tk135 per litre, five-litre bottled soybean oil at Tk630, and non-bottled palm oil at Tk104 per litre.

Traders have said unrefined soybean oil is currently sold at $1,190 per tonne in the international market. Earlier, when the committee set the prices, the price per tonne of oil was $1,090.

China built reserves by buying more oil than its demand during the Covid-19 pandemic. That is why the international oil market has been volatile for more than six months.

A Tariff Commission report notes that oil prices rose by about 65% in the global market in the last six months while prices in the local market increased by 40%.

Traders said oil was being sold in India at higher prices than in Bangladesh.

Md Taslim Shahriar, Assistant General Manager (accounts) of Meghna Group, said 70% of India's oil was self-produced while 30% was imported and then refined.

"Even then, oil prices are high there. Although Bangladesh imports 100% of its oil, prices have not increased much compared to India."

TK Group Director (finance and operation) Md Shafiul Ather Taslim said traders at the meeting had also proposed re-fixing oil bottle prices and increasing the distribution channel margin.

The current price of a one-litre bottle is Tk15 and that of a five-litre bottle is Tk50.

According to Tariff Commission sources, the annual demand for soybean oil and palm oil in the country is 18-20 lakh tonnes. The demand in Ramadan alone is 2.5-3 lakh tonnes.

Meanwhile, traders have been instructed to ensure that the impacts of rising oil prices in the international market do not reduce domestic supply. The Commerce Ministry has already written to edible oil traders, asking them to import the required amount of oil.

This is because Ramadan will commence in mid-April and the government wants to ensure that there is no crisis in the holy month.

Letters of credit were opened for importing about 1.5 lakh tonnes of crude soybean oil and palm oil in January and more than two lakh tonnes in February. Imported oil is in stocks also.

Mohd Dabirul Islam, Head of Finance and Accounts at Bangladesh Edible Oil Limited, said the company was importing oil in line with demand, adding that there would be no crisis in supply.