Fuel Price Hike To Raise Business Costs At Uncomfortable Time For Bangladesh: Md Fazlul Hoque

Dhaka, September 22, 2026 — The increase in fuel prices will have the greatest impact on economic activities that depend on diesel — the fuel most directly connected to the lives of ordinary Bangladeshis and often referred to as “the fuel of the poor.” Its use is connected with almost every sector of the economy, including agriculture, public transport and goods transportation, and as a result, the September 20 price hike will cascade through transport costs, production expenses and ultimately consumer prices.

💬 The warning comes from Md Fazlul Hoque — Managing Director of Plummy Fashions Ltd, FBCCI Administrator and former President of both the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and the Bangladesh Employers' Federation (BEF) — in an analysis published in Prothom Alo on 22 September.

⛽ Why Diesel Matters More Than Other Fuels

Diesel is the single most strategic fuel in Bangladesh's economy. Its use spans:

• 🌾 Agriculture — irrigation pumps, tractor operations and rural transport.
• 🚍 Public transport — buses, coaches and inland waterway vessels serving millions of daily commuters.
• 🚚 Goods transportation — trucks carrying agricultural produce, industrial inputs and finished goods across the country.
• 🏭 Industrial backup power — diesel-powered generators used during grid outages.
• 🚢 Inland shipping — cargo vessels on Bangladesh's extensive river network.

As electricity supply in Bangladesh is still not completely uninterrupted, many industrial units have to use diesel-powered generators as an alternative. Generating electricity this way costs approximately three times more than using grid electricity. The fuel price hike will therefore directly affect both locally consumed and export-oriented production, particularly in the readymade garment sector.

💰 The Tk 20 Per Litre Hike

The government increased the retail prices of diesel, octane, petrol and kerosene by Tk 20 per litre on Sunday 20 September — the second such hike since the new government took office in February 2026. The new retail prices are:

• ⛽ Diesel: Tk 135 per litre (was Tk 115)
• ⛽ Octane: Tk 165 per litre (was Tk 145)
• ⛽ Petrol: Tk 135 per litre (was Tk 115)
• ⛽ Kerosene: Tk 135 per litre (was Tk 115)

The hike was announced by the Ministry of Power, Energy and Mineral Resources, citing the need to align domestic prices with the elevated international fuel market and to prevent smuggling to neighbouring countries. State Minister for Energy Amitabh Chakma said the adjustment was “unavoidable” and promised that fuel prices would be cut once global markets stabilised.

💼 Why This Hike Comes At An “Uncomfortable Time”

⚠ According to Md Fazlul Hoque, the timing of the hike could not be worse for Bangladesh's economy, for several converging reasons:

• 📉 Declining business sales — consumer demand has weakened across multiple sectors due to sustained inflation and political uncertainty.
• 📉 Higher production and transport costs — already straining thin margins in the export-oriented RMG sector.
• 📉 Elevated inflation — the consumer price index was already running above 9 per cent before the fuel hike.
• 📉 Energy shortages — gas supply disruptions to industrial units have already forced production halts and order cancellations.
• 📉 Rising operating costs — including wages, electricity and bank financing costs.
• 📉 Government salary hike from next month — which will widen fiscal pressure without corresponding revenue growth.

💬 “At a time when businesses are already facing declining sales, higher production and transport costs will create additional pressure. If the prices of goods rise, there will also be a risk of renewed pressure on inflation,” Hoque writes.

📋 The Subsidy Question And Regular Adjustment Mechanism

The government has also argued that it must consider the burden of fuel subsidies. It has been argued that although fuel prices in the international market have remained high for a long period, the government has not made regular adjustments in line with those prices. Therefore, although a price adjustment may be necessary, a sharp increase at once could place additional pressure on businesses and ordinary people.

💬 “In this situation, if the downward trend in international fuel prices continues, the government should make adjustments quickly at home as well,” Hoque argues. “By returning to the regular fuel price adjustment mechanism it had introduced, the government has an opportunity to pass on the benefits of lower international prices to consumers.”

🧮 Beyond Price Hikes: Reducing System Loss

💡 Hoque also raises a structural point: it is worth considering whether increasing fuel prices is the only solution to the problem. Reducing wastage and system losses in fuel supply and distribution could create an opportunity to lower costs without passing the entire burden on to consumers.

Although raising prices may be an easier option than improving efficiency, it could have greater economic and social consequences. Bangladesh's fuel distribution system — particularly the state-owned Bangladesh Petroleum Corporation (BPC) — has long been criticised for systemic inefficiencies, including:

• ⚠ System loss in petroleum storage and distribution.
• ⚠ ageing refinery infrastructure at Eastern Refinery Limited.
• ⚠ Inefficient subsidised distribution through state-owned oil marketing companies.

Addressing these inefficiencies could partially offset the need for sharp consumer price increases.

🏛 The Policy Contradiction

⚖ Hoque highlights a fundamental contradiction in current government policy:

💬 “On the one hand, the government says it wants to make doing business easier; on the other, higher fuel prices are directly increasing business costs. Maintaining a balance between these two initiatives is therefore important at the present time.”

For the export economy specifically, the contradiction is sharper. The government has set an FY27 RMG export target of US$48 billion and is actively pursuing trade diplomacy with the United States, European Union, Japan and the United Kingdom. But rising production costs — driven by fuel, energy and wage pressures — directly threaten the price competitiveness that has underpinned Bangladesh's RMG success.

💼 Strategic Recommendations

Hoque concludes with two clear policy asks:

• 🔹 Rapid price adjustments when international fuel prices fall — restoring the regular adjustment mechanism the government had earlier introduced.
• 🔹 Initiatives to reduce wastage in fuel management — which could help keep the pressure from price increases under control to some extent.

💬 “The government's revenue is not increasing, while expenditure will rise from next month because of the increase in salaries. As a result, the pressure on government expenditure is also increasing,” he notes, signalling that the fiscal space for further subsidies is limited.

🌏 Wider Context

The analysis from one of Bangladesh's most respected industry voices carries particular weight given Hoque's multiple roles — as FBCCI Administrator tasked with conducting the apex trade body's election, as MD of an active apparel manufacturer, and as a former BKMEA and BEF president. His perspective is uniquely positioned at the intersection of trade body governance, export-oriented manufacturing and national economic policy.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA), BKMEA, the Bangladesh Textile Mills Association (BTMA), and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) have all expressed similar concerns about the cumulative impact of fuel, energy and wage pressures on the country's export competitiveness — particularly as Bangladesh prepares for LDC graduation in 2026.

For now, the immediate question is whether the government will heed the call for a return to a regular fuel price adjustment mechanism — and whether international fuel prices will cooperate by trending downward in the months ahead.