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 Dhaka: Sohel Rana, a businessman, went to buy fuel for his motorbike on April 14, the first day of the Bangla New Year 1433, expecting a shorter waiting time on a national holiday. Instead, he waited for five and a half hours before he could fill the tank of his vehicle at the Meghna Petroleum station on the Kazi Nazrul Islam Avenue in Dhaka. 

He had joined the queue at 7 am and managed to buy four litres of octane only at 12.30 pm. The government has capped fuel purchases for bikers at Tk500 to Tk1,000 over five days due to supply shortages following the US and Israel’s attack on Iran.

Fifteen days earlier, Rana had waited only an hour for fuel. The queues have grown daily since.

Petrol pump owners said the queues across the country are mainly for octane and petrol. With the Strait of Hormuz blocked and the ripple effects of the Iran war disrupting global energy flows, the government had been so far managing limited fuel supplies through rationing access instead of raising prices.

On the night of April 18, the government announced the first increase in prices since the Iran war began.

The retail prices were revised sharply upward from April 19, with hikes ranging from 15% to nearly 17% across fuel categories. A gazette notification issued by the Power, Energy and Mineral Resources Division on April 18 sets new prices at Tk140 per litre for octane, up from Tk120. It sets the price for petrol at Tk135, up from Tk116, and for diesel, at Tk115, up from Tk100.

At 12 pm, Firoz Hossen was three kilometres away from the petrol pump in a line. Holding an umbrella, he was sitting on his motorcycle at the Motijheel area of Dhaka. He had been waiting for three hours when this reporter approached him.

Hossen said that he had to take time off from work just to buy fuel, as he commutes by motorcycle.

Long lines for fuel have caused severe traffic congestion across the South Asian megapolis, as every filling station has queues stretching five to six kilometres, with two to three lines of private cars and bikes.

People wait in line at a Dhaka filling station. Photo: Jebun Nesa Alo.

Pump owners have been requesting the deployment of police at the pumps to manage the huge crowds, as chaos breaks out every day over people trying to jump the lines.

Despite rising demand, fuel sales have dropped by 20% to 30% due to the quota system and limited selling hours set by the government amid supply shortages. Bangladesh Petroleum Corporation data shows that daily average sales of petrol, which is mainly used in motorcycles, declined by 14% in March and 7% in April. Currently, there is a 12-day stock of petrol.

Tanvir, a cashier at Meghna Petroleum, a government-run filling station, said they have enough fuel supply, but that sales have indeed dropped due to the quota system and limited selling hours – from 7 am to 9 pm – since the Iran war. Previously, private pumps could sell fuel 24 hours a day.

He said a private car would take 40-50 litres, but now it will get a maximum of 10 litres. “Though we have supply, we cannot sell due to government restrictions. As a result, customers are coming every day to fill their tanks, making the queues longer.”

Pump owners usually get a minimum of 9,000 litres of fuel per day, including octane and petrol, from depots, but they are now getting a maximum of 5,000 litres, the lowest supply on record.

Though petrol pumps in Dhaka city are selling fuel on a limited scale, the crisis is more acute across the country, as most pumps remain shut due to a lack of supply.

The fuel shortage has disrupted daily commutes and raises fears of wider economic disruption across the country.

‘$3 billion in emergency assistance’

Surging global energy prices have also sharply increased import costs, placing significant pressure on government subsidies and thus intensifying fiscal strain.

The rising import costs have caused an additional subsidy requirement of Tk 36,000 crore (equivalent to nearly $3 billion) in the power and energy sector, pushing the government towards high bank borrowing, which in turn is crowding out private sector credit.

Under this financial stress, the government is seeking about $3 billion in emergency assistance from development partners, including the International Monetary Fund (IMF), the World Bank, and the Asian Development Bank (ADB).

The high energy import costs have also strained foreign exchange reserves, prompting Bangladesh Bank, the country’s central bank, to devalue the taka, raising the risk of inflation to persist above 9%. 

Motorcycles wait in line far from a Dhaka filling station. Photo: Jebun Nesa Alo.

Domestic refining suspended

Meanwhile, Bangladesh’s only state-owned oil refinery, Eastern Refinery Limited in Chittagong (ERL), has been forced to suspend its refining operations due to a shortage of crude oil in the second week of April.

The suspension of ERL, which refines around 4,500 tonnes of crude per day, has created the risk of further supply shortages. The government is expecting to resume operations by May, soon after the next crude shipment arrives.

The Ministry of Power, Energy and Mineral Resources has begun the process of importing 3 lakh tonnes of diesel from alternative sources through direct procurement to stabilise supply.

Officials said Bangladesh is also moving to purchase fuel outside existing long-term contracts, as deliveries under current agreements have become uncertain amid the conflict. The government has reached out to several countries, including India, China to secure more reliable fuel supplies.

The reopening of the Strait of Hormuz has eased immediate concerns, with a 25,000-tonne octane shipment arriving at Chittagong port on April 17 night, ensuring supplies for April and May.

With the latest shipment and ongoing local production, total stock is expected to reach 55,500 tonnes, exceeding storage capacity and enough to meet more than 45 days of demand.

However, although supply at pumps has increased, the quota system introduced earlier remains in place, leaving consumers waiting for hours to buy fuel.

© The Wire