The prices of octane now leapt to Tk 58 from Tk 45 per litre, petrol to Tk 56 from Tk 42, and diesel and kerosene to Tk 33 from Tk 30.

It is the ninth time that the four-party alliance government has raised the fuel prices since taking office in October 2001 under pressure from multilateral donors in the wake of a global increase in the prices of petroleum and petroleum products.

"While formulating the budget, I extensively consulted with renowned economists, leading businessmen and the members of the civil society on this issue. All of them unanimously agreed that raising the price of oil is necessary and unavoidable," Finance Minister M Saifur Rahman told parliament while tabling the national budget for FY2006-07.

"We have no alternative to adjusting the domestic petroleum prices realistically," he said.

The prices of petroleum and petroleum products have spiralled upwards abnormally recently, he said, adding that other countries including the neighbouring ones have also increased their oil prices.

Because of selling petroleum products in the domestic market at lower rates than the import prices, the liabilities of Bangladesh Petroleum Corporation (BPC), country's lone importer of petroleum products, have been increasing rapidly to an "unsustainable level", Saifur said.

The BPC's liabilities to different banks rose to Tk 10,500 crore by April this year, which has created a liquidity crisis in the banking system, according to the finance minister.

"I have taken steps to tackle this situation temporarily by injecting funds to the banks from the government budget. The macroeconomic stability is threatened because of pursuing the policy of not aligning the domestic petroleum prices with that in the international market," he said.

PREVIOUS FUEL PRICE HIKES
The BNP-led coalition government first increased the prices of kerosene, diesel, petrol and octane on December 27, 2001. The prices of kerosene and diesel increased by Tk 2 per litre to Tk 17, petrol to Tk 28 from Tk 23, and octane to Tk 30 from Tk 25.

The government also increased the price of jet fuels a couple of times.

By December 2004, the government increased the prices of diesel thrice, petrol and octane twice, and kerosene four times.

It increased the prices of diesel and kerosene by Tk 3 per litre in January 2005 besides increasing the price of gas.

On May 24 the same year--only six months into the last price hike, the government again increased the prices of diesel, kerosene and petrol, bowing to the donors' pressures.

The price of petrol was reset at Tk 35 per litre, raising it by Tk 2, diesel at Tk 26, marking a rise of Tk 3, and kerosene at Tk 25, pushing it up by Tk 2. The price of octane, however, remained unchanged this time.

The government raised the prices of the four fuel oils for the eighth time on September 4 last year.