The government in Bangladesh has just hiked fuel prices by a record 51.2 percent, triggering widespread protests at gas stations across the South Asian country.
Protests erupted following the decision, with thousands of people thronging gas stations before the increase went into effect.
The price of gasoline increased to 130 takas ($1.36) per liter on August 6.
95-octane gasoline increased 51.7 percent to 135 takas ($1.42).
Diesel and kerosene jumped 42.5 percent.
Thousands of motorcycle riders thronged filling stations on Friday, causing several gas stations to suspend sales ahead of the price hike.
Protesters are demanding a rollback of the higher costs, Dhaka Tribune reported.
Several student organizations, including the Progressive Students’ Alliance, protested against the unprecedented fuel price increase.
Local media published photos of police clashing with protesters on Aug. 7.
Belayet Hossain, the president of Chittagong Metropolitan Transport Owners Group, said the organization would suspend bus service in Chittagong to protest against the fuel price hike, which prompted transport operators to increase bus fares.
The increase in fuel prices was imposed against the backdrop of Bangladesh’s high inflation rate, which has been above 6 percent for nine consecutive months and hit 7.7 percent in July, putting pressure on lower-income families.
Nasrul Hamid, state minister for power, energy, and mineral resources, said the fuel price hike was necessary due to the global price increase caused by the Russia’s invasion of Ukraine, which has been ongoing since February.
“The new prices will not seem tolerable to everyone,” Hamid told reporters.
“But we had no other choice.
“People have to be patient.”
Hamid added that fuel prices will be adjusted when global prices fall.
Bangladesh has been experiencing numerous power outages in recent weeks due to fuel shortages.
The government is now mulling staggered holidays for garment manufacturers to reduce power consumption.
Hamid said the proposed strategy will help Bangladesh conserve up to 550 megawatts of electricity per day when power cuts exceed the usual one-hour power outage to three hours in some areas, the Hindustan Times reported.
The government has taken several measures amid dwindling foreign exchange reserves, including curbing luxury goods imports and fuel imports and shuttering diesel-run power plants amid recurring power outages.
The country’s foreign exchange reserves stood at $39.7 billion as of August 3, sufficient to cover only about five months of imports and down from $45.9 billion in 2021.
Bangladesh sought a $4.5 billion loan from the International Monetary Fund (IMF) in July, joining South Asian neighbors Pakistan and Sri Lanka in seeking help to cope with mounting pressures on their economies.
The IMF said external conditions for Bangladesh have deteriorated sharply due to economic spillovers from the war in Ukraine.
China has invested heavily in Bangladesh in recent years through the “One Belt, One Road” program, later renamed the Belt and Road Initiative, which Beijing uses to finance infrastructure projects around the world in an effort to build geopolitical influence.
According to China’s state-run media, Bangladesh and China signed several Belt and Road agreements worth $21.5 billion, including a power system upgrade and expansion project.
In 2018, China surpassed the United States to become the top investor in Bangladesh, with an overall investment of $1 billion, according to Chinese state-run media.