NN Online:
The Center for Policy Dialogue (CPD), a private think-tank, has proposed a new fuel oil pricing model for Bangladesh, focusing on energy security and transition.
They recommended adopting an Artificial Neural Network (ANN)-based pricing model to establish a more stable, transparent, and equitable system. The ANN model offers a shock-absorbing mechanism at the import stage, mitigating exchange rate volatility while reflecting the socio-economic realities of the country.
According to CPD, the new model could reduce existing fuel prices by Tk 10 to Tk 15 per litre.
The think-tank on Thursday came up with the new price model at a dialogue titled “Market-based Fuel Pricing: Government-led Initiatives and Possible Revision” at a hotel in the city.
Bangladesh Petroleum Corporation (BPC) Chairman (Secretary) Md Amin Ul Ahsan attended the dialogue as the special guest while Chairman of the Bangladesh Energy Regulatory Commission (BEFC) Jalal Ahmed, and Additional Secretary (Operation) of the Energy and Mineral Resources Division Khalid Ahmed were present as guests of honour.
Energy Advisor of the Consumers Association of Bangladesh (CAB) Professor Dr M Shamsul Alam, Vice President of the Bangladesh Independent Power Producers’ Association (BIPPA) Humayun Rashid, Deputy General Manager (LNG) of the LNG Division of the Rupantarita Prakritik Gas Company Limited Engineer Mohammad Abdul Mukit, and Director of the EMA Power Investment Ltd Abu Bakar Siddique Ali Chowdhury attended as distinguished discussants.
Research Director of CPD Dr Khondaker Golam Moazzem moderated the dialogue while CPD Senior Research Associate Helen Mashyat Preoty, and CPD Programme Associate Faisal Quaiyyum delivered the keynote presentation.
Golam Moazzem said earlier the government of Bangladesh adopted an automated pricing system for fuel oils particularly diesel, petroleum, octane, kerosene and jet fuel in March 2024.
“This decision was taken to reduce the fiscal and financial burden of the government as part of the International Monetary Fund (IMF) loan condition. However, this pricing formula is being criticised for a number of reasons. Hence, the revision of the government-set price is immediately required.”
In this connection, he said, CPD in partnership with the Australian High Commission in Dhaka has undertaken a study on “Market-based Fuel Pricing Mechanism Government-led Initiatives and Possible Revision.”
At the presentation, Helen Mashyat Preoty said based on the findings of the study, which presents a market-based pricing model using an ANN, it is strongly recommended that the current methodology of price determination be re-determined.
“The adoption of the ANN-based model at the importing point, as outlined in our research, will not only simplify the pricing method but also ensure sensitivity to both fiscal constraints and consumer capabilities.
“This change is essential for fostering a balanced and equitable pricing environment, aligning with international best practices and improving transparency and fairness in pricing strategies,” she added.
Preoty said the draft regulation prepared by Bangladesh Energy Regulatory Commission (BERC) for the fuel oil price should be approved by the ministry immediately.
“The draft mandate regarding the determination of fuel oil by BERC must be approved by the ministry. This approval will give BERC the power to determine the price of all the fuel oils.
“As BERC has been established as a regulatory body of the power and energy sector, the full monitoring and implementation of the automated pricing model should be executed by BERC. BERC can organise public hearings on a regular basis to ensure the transparency of the process,” she added.
She further said the predictive power of the ANN model also plays a crucial role in the strategic shift towards sustainable energy.
“By providing a clear forecast of fuel costs, the model enables consumers and policymakers to plan for transitions to alternative energy sources more effectively,” she added.
Preoty said this foresight supports long-term energy strategies, aligning financial and infrastructural investments with sustainable development goals.
