Why government faces challenges with oil-related issues?

The crisis regarding edible oil continues to persist. On December 9, when there was a sudden shortage of bottled soybean oil in the market, the government decided to raise the price by 8 taka per liter. As a result, the price of one liter of bottled soybean oil has now been set at 175 taka, while the price of loose soybean oil is 157 taka. The price of loose soybean oil has increased from 149 taka per liter to 157 taka. The price of loose palm oil has also risen from 149 taka to 157 taka per liter. However, soybean oil is unavailable at these prices. Most shops in various parts of the capital are unable to supply bottled soybean oil, and there is a kind of chaos regarding loose soybean oil. Traders are charging arbitrary prices for loose soybean oil, with some selling it for as much as 200 taka per liter.

There has been a shortage of bottled soybean oil in the country for several days. Along with the price increase, there is also a supply shortage in the market. Recently, edible oil refining companies have been calling for an increase in soybean oil prices to align with international rates. Meanwhile, dealers or suppliers have reduced the supply of bottled soybean oil in the market, leading to a shortage at the retail level. There are allegations that some unscrupulous traders are creating an artificial shortage ahead of the upcoming Ramadan. Due to the manipulation of traders, the government's exemption on import duties for oil has had no effect. As a result, the edible oil market is becoming uncontrollable every day. The government has reduced the value-added tax (VAT) on edible oil imports from 10 per cent to 5 per cent, which should have made the supply normal and lowered the price in the market. However, this is not the case anywhere.

Although the government raised the price of edible oil, citing international price increases, a recent report published by the World Bank presents a different perspective. According to the report, the prices of almost all imported consumer goods in the country have actually decreased in the international market. Additionally, the price of fuel oil has fallen from $100 to $78 per barrel. As a result, shipping costs and other transportation expenses have also decreased. The price of the dollar has also gone down in the country, with the exchange rate dropping from a maximum of 132 taka per dollar to 120 taka. These factors have led to a reduction in import costs. Therefore, logically, the prices of imported goods should have decreased, but they have not. Instead, the prices continue to rise. Despite various government initiatives to reduce edible oil prices, there has been little success.

The most surprising part is that traders suddenly create artificial shortages, making the oil disappear from the market. When the price of oil is increased by 8 taka per liter under pressure, bottled soybean oil mysteriously reappears in the market overnight. This is nothing short of daylight robbery. In reality, there was no actual shortage of oil. Through such schemes, unscrupulous traders have taken advantage of the situation, causing immense hardship for consumers and extorting millions of taka from them. Similar incidents have occurred in the past as well.

Today, it's oil, tomorrow it could be sugar, and the day after, perhaps some other product – syndicate traders are exploiting artificial shortages to their advantage. As a result, consumers are facing higher costs, and the government is also under pressure. Currently, there is no one to scrutinize the details of the bottled oil being supplied in the market, such as when it was imported, what the import cost was, and when it was distributed.
For the ongoing oil crisis, some are pointing fingers at the importers and refining companies, while others blame the wholesalers. Retailers claim that even though they have already paid in advance, they are not receiving the oil. Some are also highlighting the issue of being forced to buy other non-essential products along with edible oil. However, there is no consistent administrative monitoring of any of these issues.

The manipulation of the oil market has been going on for a long time. Syndicates involved in the oil trade often create artificial shortages, citing international market conditions as an excuse to raise prices and loot thousands of crores of taka. These syndicate traders and hoarders know that by exerting pressure, the government will eventually be forced to increase the price of oil. Therefore, by hoarding, they can make substantial profits, and this is exactly what they have done.

In Bangladesh, the import of soybean oil is under the control of a syndicate consisting of five to six companies. If the government had opened up the soybean oil import process, this situation would not have arisen. Investigations reveal that the importers are illegally hoarding soybean oil through their designated dealers, thus creating the current crisis. Meanwhile, they are citing price increases in the international market as the reason for raising the price of oil, and the government has supported this argument.

In the past, we have seen that whenever the price of something rises or a product disappears from the market, the government offers some vague explanation. During the previous government’s tenure, the price hikes were attributed to the pandemic and the war, which were partly true. However, the public did not fully grasp these reasons. Their demands are not excessive, but when it becomes difficult to meet those demands, they turn to criticize the government. Before the price increase, the large hoarders had not released the oil into the market. While the government has had discussions with those who control the oil market, the crisis was not resolved before the price hike. There are strong reasons to believe that the current government has bowed to the influence of the business community.

The question is, will this manipulation of the oil market continue? How much profit is enough to achieve the target? In this way, a certain greedy class of people is holding the common people hostage, robbing their pockets, and turning into "money mongers." They are laundering money abroad, and "Begumpara" (luxury enclaves) are being established one after another overseas. Despite the change of government, the old process of amassing wealth has not ceased, despite the countless lives and resources it has cost.

The current government is not acknowledging the oil syndicate issue, even though many of the same individuals who were vocal about breaking the syndicate during the previous government are now in power. Does that mean that with sitting on the government's throne, the stance on the syndicate issue changes too? How is it that the same syndicate, which was heavily criticized, is still operating? Who were the syndicate members during the previous government, and why are they not being held accountable? Why is no action being taken against oil hoarders even now?

The government must quickly decide whether it will be solely business-friendly or whether it will also be people-friendly, catering to all classes, including businesspeople. Simple measures like appeals, tax relief, and duty exemptions will not suffice. If necessary, strict actions should be taken. It must be remembered that just as a living creature has its claws, a stick is also necessary to discipline those who act out of greed.

Chiroranjan Sarker: Columnist