Fuel oil imports dip 20% in 2023

Bangladesh's fuel oil imports declined by nearly 20% in 2023, even with budget outlays remaining mostly unchanged.

According to data from the Chattogram Custom House, Bangladesh spent Tk47,789 crore to import 1.04 crore tonnes of fuel oil in 2022. But in 2023, the country spent Tk47,261 crore to import 82.66 lakh tonnes.

Despite the drastic decrease in imports, expenditures on imports did not fall due to the increased cost caused by devaluation of the taka against the US dollar.

The imported fuels included high speed diesel oil, furnace oil, petroleum oil and oils obtained from bituminous minerals, crude, etc.

Imported fuel oil is used for a variety of purposes in Bangladesh, including power generation, fertiliser production, transportation, and agriculture.

Experts say global fuel oil prices did not increase significantly in 2023, and in some cases even fell. However, the taka's devaluation against the dollar was over 20%, which led to a significant increase in import costs.

In response to the rising import costs, the government implemented austerity measures, including a reduction in fuel oil imports. This led to power outages and other disruptions for businesses and consumers.

Anupam Barua, director of the Bangladesh Petroleum Corporation, told The Business Standard that the decline in fuel oil imports was due to a combination of factors, including lower consumption and the devaluation of the taka.

"Our imports [through the BPC] have fallen by about 10% due to lower consumption," he said. "The dollar crisis is also an issue, but it is not a major factor. After all, we are not closing anything due to lower imports."

Ahsan H Mansur, executive director of the Policy Research Institute, told TBS that the devaluation of the taka led to higher import costs, but the decline in fuel oil imports was also due to a shortage of dollars.

"The devaluation of the taka made fuel oil imports more expensive," he said. "But fuel oil imports fell due to a shortage of dollars, which caused industries and people to suffer."

No negative impact on revenue

Customs officials said despite a 20% decrease in fuel oil imports during the same period, it has not significantly impacted revenue collection due to the increased cost. In fact, compared to the previous year, more than Tk12,000 crore was collected in import taxes, up by Tk50 crore from previous year.

Almost the entire imported fuel oil in the country is imported through the Chittagong port, where the assessment and responsibility for revenue collection are managed by the customs house.

Md Badruzzaman Munshi, deputy commissioner of Chattogram customs house, told TBS, "Despite the decrease in imports, revenue collection has not decreased but has increased somewhat due to the higher cost." He went on to say, "In addition, considering the increased rate in the invoice value instead of tariff value has also contributed to the increase in revenue collection from this sector."