* Fourth hike since May, last raised in Nov
* High global price and demand pile subsidy pressure
* Price rise to add to already high inflation
DHAKA, Dec 30 Bangladesh raised fuel
prices with effect from Friday in its fourth such hike since
May, a move that will trim the country's subsidy burden but add
to persistently high inflation.
Petrol, 95-octane gasoline, diesel, kerosene and fuel oil
will now cost an additional 5 taka ($0.06) a litre. The price of
petrol has been fixed at 91 taka a litre, 95-octane gasoline at
94 taka, diesel and kerosene at 61 taka and furnace oil at 60
The government, under pressure from global lending agencies
such as the International Monetary Fund to raise
heavily-subsidised fuel and power prices, last increased fuel
prices in November and electricity tariffs this month.
The hike would likely give ammunition to opposition
political parties looking to dislodge the government before the
next election, due by the end of 2013, since the step is set to
boost prices in a country where annual inflation was 11.58
percent in November.
Price pressures are a major concern for the government as
more than a third of the country's 160 million people live on
less than $2 a day.
"Certainly there will be a negative impact on people's
spending but we have no other option but to increase oil prices
as the previous hike was flat because of a sharp depreciation of
the local currency against the dollar," an energy ministry
State-owned Bangladesh Petroleum Corporation (BPC), the
country's sole oil importer and distributor, incurred losses of
around $1 billion on fuel subsidies in the year to June.
Bangladesh's demand for diesel and fuel oil is growing
sharply as a shortfall of natural gas forced it to turn to
costly oil-fired power plants to resolve its crippling
The heavy imports coupled with high global prices have piled
pressure on the country's balance of payments and subsidy bill.
The local currency has also come under pressure from soaring
bills for imports, mainly of oil.
The total subsidy including for oil for the year to June
2012 is forecast to jump to around 460 billion taka ($6 billion)
or 5 percent of gross domestic product, more than double the
original estimate of 200 billion taka, and up from 195 billion
taka the previous year.
Brent crude is poised to close the year at a
record-high average of around $111 a barrel, surpassing the
previous annual peak of just below $100 reached in 2008. U.S.
crude is on track to record a 9 percent gain for the
(Reporting by Ruma Paul; Editing by Anis Ahmed)