The Bangladesh Trade and Tariff Commission (BTTC) has recommended that the government impose a 25 percent regulatory duty on the export of crude and refined rice bran oil to discourage shipments and increase domestic supply.

The suggestion comes in response to soaring cooking oil prices in the local market over the past three months, driven by rising international prices due to a reduction in palm oil production and Indonesia's increased focus on using palm oil for biodiesel.

In Dhaka, the average price of unpackaged palm oil, the most consumed edible oil, rose by 20 percent to Tk 158.5 per litre yesterday, according to market price data compiled by the Trading Corporation of Bangladesh.

It was Tk 132.5 per litre three months ago.

Prices of soybean oil have also increased, with supply still falling short of demand.

The BTTC noted that Bangladesh requires approximately 23 lakh tonnes of edible oil annually, and more than one-fourth of this demand could be met by producing rice bran oil.

Bangladesh produces 5.5 crore tonnes of paddy annually, from which up to 7 lakh tonnes of rice bran oil can be extracted.

Currently, the country has 20 rice bran oil mills with an annual production capacity of 4.53 lakh tonnes. Of this capacity, 2.86 lakh tonnes are produced and packaged.

The BTTC stated that rice bran exports have declined since the government imposed a 25 percent export duty.

However, crude rice bran oil continues to be exported to India, as no duty currently discourages its export.

Bangladesh annually exports around 70,000 tonnes of crude rice bran oil, according to the commission.

The BTTC observed that the supply of edible oil is decreasing due to the export of rice bran oil.

Exporters are reportedly reluctant to supply the oil to the Trading Corporation of Bangladesh (TCB), citing high market prices. The TCB has requested measures to discourage the export of the oil.

Last month, the BTTC organised a seminar with stakeholders.

Based on its analysis, the commission, in a letter to the commerce secretary and the National Board of Revenue on Wednesday, suggested that a 25 percent regulatory duty be imposed on the export of crude and refined rice bran oil.

It also proposed that prior permission from the commerce ministry be made mandatory for the export of rice bran and bran oil.

Chitta Majumder, managing director of the Majumder Group of Industries, which exports rice bran oil, said prices of edible oil, including rice bran oil, rose in India after the neighbouring country slapped import duty on cooking oil import.

Price of edible oil has also shot up in the international market, he added.

However, Bangladesh gets duty-free benefits under the South Asian Free Trade Area, so importers from there are showing increased interest to make imports from Bangladesh, he added.

Majumder said imposition of regulatory duty on exports of rice bran oil will make export less attractive, but consumers will get the oil at cheap rates.