DHAKA (AFP, BLOOMBERG) - Thousands of Bangladeshis besieged petrol stations across the country after the government raised prices by as much as 52 per cent, the largest jump on record, on the back of higher oil prices.

Russia's invasion of Ukraine has seen global energy prices soar, though oil has fallen back in recent weeks as recession fears mount.

Dhaka announced Friday (Aug 6) that the price of petrol was going up by 51.7 per cent and diesel by 42.5 per cent from midnight.

Motorcycle riders raced to fuel stations nationwide to try and fill up before the price rise went into effect. Some stations paused sales, and sporadic protests broke out.

Demonstrators said the increases would disproportionately hit the country's tens of millions of poor people, who use diesel to power transport and farming irrigation pumps.

In Sylhet city, retailers tried to impose the higher prices immediately after the hike was announced, Police Commissioner Md. Nisharul Arif said. "People gathered and protested in front of all the fuel pumps."

There were similar protests in other cities, taking off from demonstrations staged earlier in the week.

Desperately seeking fuel

Energy Minister Nasru Hamid told reporters the decision was driven by global markets.

"Some adjustments have to be made in view of the global situation. If the situation normalises, the fuel prices will be revised accordingly," he said.

Bangladesh has been hit by higher energy prices in the wake of the war in Ukraine, spurring a struggle to source fuel for power stations.

Diesel power plants accounting for 1,500 megawatts of generation capacity - 10 per cent of the total - have been taken offline, as have some gas-fired plants.

In recent weeks, there have been electricity blackouts of up to 13 hours a day.

The power shortfalls have been compounded by a depreciating currency and dwindling foreign exchange reserves.

The Bangladeshi taka has declined by around 20 per cent against the dollar in the past three months, further weakening the nation’s finances – with the current account deficit hitting US$17 billion. 

The government this week began cracking down on money changers to shore up the local currency.

The central bank has suspended the licence of five money changers and served notice on 42 others, citing alleged manipulation of the exchange rate.

Hand in hand

Dhaka has asked the International Monetary Fund (IMF) for US$4.5 billion (S$6.2 billion), the Daily Star newspaper reported, after a visit by representatives of the Washington-based lender.

The IMF earlier said it was prepared to help Bangladesh with an aid programme to face the current economic crisis, as well as financing for longer-term challenges.
While there have been contacts between authorities and IMF staff, timing of formal talks is unclear since the fund board is currently on recess.

An IMF spokesman noted the “unprecedented global shocks” facing many countries, and pointed to measures Bangladesh already has taken “to deal with the economic disruptions caused by the ongoing war in Ukraine”, including allowing a flexible exchange rate, temporary restrictions on some non-essential imports, and reducing electricity demand. 

An “IMF-supported programme will provide safeguards in the event of further deterioration of external conditions, while supporting the country’s efforts to address the longer-term macroeconomic implications of climate change”, the spokesman said. 

Bangladesh is also seeking US$1 billion each from the World Bank and Asian Development Bank.

Several South Asian nations are struggling with galloping inflation and deteriorating public finances triggered by global economic headwinds, including nearby Sri Lanka, which also is negotiating an IMF loan.