Chronicle of Mahfuz Anam: Why is public utility a foreign concept for our decision-makers?
Unexpected roadblocks forcing commuters at hours of traffic congestion, prohibition of access to major arteries for foreign visitors, gas and electricity cuts for maintenance work without prior notice, unreasonable diversion of traffic for megaprojects, at frequent government prices hikes of the essentials – everything is done without an iota of consideration for the convenience of the public, let alone rights. Much of the frustrations of ordinary people could only be better handled if public rights and the government’s obligation to citizens were on the radar of our bureaucrats and planners.
It is true that governments often have to make unpopular decisions. Among them, the increase in the prices of basic necessities is the most worrying for both the government and citizens. For the former, this leads to an immediate decrease in popularity and general unrest, and for the latter, an increased economic burden, making life more difficult to bear.
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A good example is the government’s decision to increase fuel prices on November 3. On that day, the government increased the prices of diesel and kerosene by 23%, from 65 to 80 Tk, two elements that have a direct impact on the economy and the lives of the most disadvantaged sections of society. Total diesel consumption is four million tonnes, of which 70 percent is used by the transport sector and 20 percent by farmers. The total demand for kerosene is 100,000 tons, mainly used for cooking, lighting and aviation fuel.
Two reasons have been put forward to explain this increase: first, too great a price difference between India and us will lead to the smuggling of fuel. How will this be stopped, the price of diesel being 101.56 Rs on November 1, which is equivalent to 124.41 Tk per liter, while our diesel will now cost 80 Tk? The price differential of Tk 44.41 per liter (over 50 percent) will remain, which is a large enough margin for smuggling to continue. So this argument does not hold water.
The second reason was simple: the rise in international prices. Between July and September, the average price of oil climbed 71% to $ 73 per barrel. Then in October, it hit $ 83.7 USD. We must therefore increase our prices, it was the logic of the government. Bangladesh Petroleum Corporation (BPC) was losing Tk 20 crore per day. This bleeding had to stop, and raising the price by 23% would be the minimum they could live with.
The logic of the Energy Ministry is that domestic prices will have to reflect international prices, and since diesel and kerosene prices have increased, consumer prices must also increase. We would have found this argument acceptable if domestic prices had actually been adjusted to fluctuations in international oil prices, which means that our prices not only rise, but also reverse when international prices fall. But this is rarely the case, and when it is, there is only marginal adjustment.
Immediately after the Covid-19 pandemic hit the world and the global economy collapsed, oil prices fell to $ 27 a barrel. From 2015 to 2021, BPC made a profit of Tk 43,138 crore. Where does this “profit” come from? From the public, who were forced to pay a much higher price for diesel and kerosene than they should have, as international prices were quite low. By what right did the Ministry of Energy extort additional payment from ordinary citizens? This is, in our opinion, tantamount to a form of extortion by the government under a false pretext.
If we accept BPC’s claim that it is losing Tk 20 crore per day, then the annual loss is about Tk 7300 crore, far less than what PK Halder stole from our banks. This could have been easily offset by the accumulated profits of PCBs over the past six years. Even today, in the midst of our pandemic recovery, the government will earn an almost equivalent amount of VAT and fuel duty, which it can use to pay for PCBs, thus avoiding the need for a price hike of energy. But the energy ministry has chosen to “extract” the money from consumers, who are mostly lower middle classes, if not downright poor, and risk seriously damaging our economic recovery.
Which brings us to the question of timing. Why now? As we are recovering from Covid, as our exporters are starting to put their feet on the ground, as our domestic manufacturers are gradually putting their homes in order, as our workers are starting to find work, entrepreneurs are starting to emerge at the end of the tunnel, just as our farmers – who fed us well at the height of the pandemic – are finding a way out of their depressed situation, suddenly imposing a price hike that will make us the worse appears more as a sabotage of our recovery than a policy to ensure our growth.
Nobody benefits from it, except the BPC and its supervisory ministry. It seems that the interests of the people – if I may say so, that of the government – have been set aside to serve the interests of a business.
The price hike has hit the very root of the transportation sector – which acts as a backbone to maintain market stability – forcing owners of these vehicles to raise fares. But they also took advantage of the situation to demand a much higher price increase than was necessary. Although the government said it was 28 percent, the reality of the market was 50 percent. For the transport bosses, it was a golden opportunity to take the public hostage and force the hand of the government, under threat of strike, to give in to their proposals. Bus and truck owners claimed that the last fare hike was in 2015, which for launch owners was in 2013. Therefore, all of their outstanding demands had to be met now.
Finally, there is the question of the method by which the government implemented the increase in fuel prices.
There is a practice of holding a hearing in which the voices of stakeholders are heard. That they are ever taken into consideration, we have very little evidence. But the ritual is taking place and, at the very least, the media is covering it so people know, at least, what the stakes are.
This time around, even that ritual did not take place, bypassing the Bangladesh Energy Regulatory Commission (BERC) which usually hosts these hearings. Why? So far we have had no response. As a result, the declaration of the price increase took everyone – except those responsible for formulating it – by total surprise. The first to respond have been the transport owners, whose vehicles have stayed off the road and have demanded new passenger fares be set before they resume service. After three days of strike action and the resulting public suffering, the government increased bus fares by 28% and introductory fares by 43%. The interests of the BPC as well as the owners of buses, trucks and speedboats have been served.
Guess whose interest was not served? You’re right, people’s interest, the daily commuters. They have no union, no pressure group, no rich benefactor. Our public representatives are supposed to represent them. But the reality is that most of them have their own respective economic axes to grind. Where’s the time to think about the audience? Our parliament has much better and more important things to do. People thought they had votes they could vote every five years and make their wishes come true. As that no longer matters, both literally and figuratively, they have no other choice but to accept whatever happens to them.
Let’s do some common sense reasoning. Bureaucrats at the Energy Ministry and the BPC knew full well what the impact of rising fuel prices would be on the economy, and how ordinary people would suffer. They also knew very well that owners of transport of all types would make all kinds of exaggerated demands and, with a sudden strike, force the government to accept their demands. Knowing all this, shouldn’t they first have had some sort of dialogue with the relevant stakeholders? The price increase could easily have been calculated on the basis of the 23% increase in the prices of diesel and kerosene, agreed, signed and sealed and then made public, specifying that from such and such a date, the prices of the fuel will be raised by the government and all those sectors concerned will be authorized to increase the tariffs as detailed. It would have saved the public so much trouble and hardship.
Instead, chaos ensued in which commuters suffered infinitely. The decision to increase fuel prices was taken on November 3. It reached the press on November 4. and a precious waste of time for the poor and ordinary people. When meetings were held, they only formalized owners’ demands, as if the hike in fuel prices was actually an excuse for the government to sanction price hikes for bus and speedboat owners. .
In our opinion, such things happen because of a fundamental lack of respect for anyone who is not part of the administration or the ruling party.
Mahfuz Anam is the editor and publisher of The Daily Star.