The Bangladesh Energy Regulatory Commission (BERC) has announced plans to adjust jet fuel prices every three months, aligning the pricing mechanism with international market fluctuations.
While other regulatory measures will remain unchanged, the commission is considering a model akin to that used for liquefied petroleum (LP) gas, focusing solely on adjusting import prices.
Since 12 April 2021, following a public hearing, BERC has been announcing LP gas prices on a monthly basis, adjusting rates according to global market shifts.
A similar formula is now under consideration for jet fuel, according to BERC Chairman Jalal Ahmed.
He said preliminary discussions are underway regarding a quarterly price adjustment system.
A public hearing will be held on 23 March, during which all stakeholders will have the opportunity to present their views before a final decision is made.
When asked why jet fuel prices would not be adjusted monthly, as is the case with LP gas, Ahmed explained that the user base for jet fuel is significantly smaller.
Consequently, an initial decision has been made to review prices every three months, with further adjustments to be considered based on market conditions.
For the first time, BERC will determine jet fuel prices, a responsibility previously held by the Bangladesh Petroleum Corporation (BPC), which has both imported and set prices for the fuel.
The interim government assigned this regulatory function to BERC via a directive from the Ministry of Energy and Mineral Resources on 18 September, following which BPC formally submitted an application for price adjustments.
Meanwhile, jet fuel distributor Padma Oil Company has submitted a request to increase its distribution charges, stating that the cost of supply and marketing stands at Tk2.11 per litre, whereas the current recovery rate is only 95 paisa per litre.
Those wishing to participate in the upcoming public hearing must register by 18 March by submitting a written request to BERC.
Jalal Ahmed further stated that, in the absence of a pre-existing pricing formula, discussions have been held with BPC to understand its pricing methodology.
Additionally, BERC is reviewing jet fuel prices in key international markets, including Singapore, Kuala Lumpur, Dubai, and Jeddah, alongside cities with significant expatriate traffic.
BPC has referenced pricing models in Kolkata, Karachi, and Delhi, underscoring the importance of considering expatriate-dominated flight routes.
According to BPC data, Bangladesh consumed 7.346 million metric tonnes of fuel in the 2023-24 fiscal year.
Diesel accounted for 67.19% of total consumption, followed by furnace oil at 11.99% and Jet-A1 fuel at 6.42%.
Petrol made up 6.19%, octane 5.36%, kerosene 1.05%, and other fuels 1.8%.
BERC was established as an independent and quasi-judicial entity following the enactment of the Energy Regulatory Commission Act in 2003.
Although formed to ensure accountability among gas and electricity distribution companies while safeguarding consumer rights, the commission only became fully operational in 2008.
Despite having the legal authority to regulate all energy prices, BERC had been restricted to overseeing gas and electricity tariffs due to regulatory constraints.
Thirteen regulatory frameworks have been enacted so far, while twelve others have remained pending approval for over a decade.
The ousted Awami League government, through an executive order in 2023, amended the law to enable price adjustments without BERC’s intervention, effectively rendering the commission powerless.
BERC's role in price determination had previously highlighted numerous discrepancies within utility companies, creating pressure on the entities involved. The executive order, however, stifled this regulatory process.
Following the assumption of power by the interim government, the executive directive allowing direct price adjustments was revoked.
A gazette notification issued on 27 August reinstated BERC's authority over electricity and gas tariff regulation.
Subsequently, jet fuel pricing responsibilities were also transferred to the commission.
Nevertheless, diesel, kerosene, petrol, and octane prices remain subject to executive adjustments, a decision that has drawn criticism from various stakeholders.
