The Centre for Policy Dialogue (CPD) today said the government could reduce fuel prices by Tk 10 to Tk 15 per litre by using a market-based pricing model.

The government has reduced fuel prices under the automatic pricing formula, which do not reflect the international market, the independent think-tank said at a briefing at its office to present its assessment of the state of Bangladesh's economy for the 2024-25 fiscal year.

At the International Monetary Fund's request, the government introduced the automated fuel pricing mechanism in March 2024 to reflect international market prices monthly.

For January, the prices of diesel and kerosene were reduced by Tk 1 per litre, which are currently sold at Tk 104 per litre.

However, it kept the prices of every litre of octane and petrol unchanged at Tk 125 and Tk 121 respectively for the month.

At the briefing, CPD researcher Helen Mashiyat Preoty said the automatic pricing mechanism for fuel adjustment under the IMF's conditions is a positive step, but it has some flaws as well.

After the implementation of the automatic pricing system, people expected fuel prices to decrease significantly in line with the fall in international prices, she added.

Unfortunately, due to the failure to follow the correct procedure, there have been few visible changes in fuel oil prices, she added.

She said the pricing formulas adopted by Bangladesh Petroleum Corporation (BPC) and the Bangladesh Energy Regulatory Commission (BERC) for fuel oil need to be revised.

As a result, fuel prices could be reduced, and the current system of automatic pricing, which shifts the burden of additional costs onto consumers, is unacceptable, she added.

Preoty said the prices of diesel and kerosene were reduced by Tk 1 per litre from January 1 this year.

According to a study conducted by the CPD last year, such price adjustments are inconsistent with a market-based pricing structure.

Along with the pricing method used by the BPC, there is an existing fuel pricing mechanism by the BERC, although it has not yet been implemented, she added.

However, in the future, if BERC is entrusted with the responsibility of setting prices, the significance of the method adopted by the commission will increase, she added.