Fuel price hike raises concerns

The price of fuel have increased over 21 times since the effects of the Goods and Services Tax in India impacted Bhutanese consumers in November last year. There have been continuous hikes in the fuel price in India, which resulted in hikes in Bhutan.

Since May this year, fuel prices rose by almost Nu 10. In the past one month, petrol rates have hiked up by nearly Nu 3, and diesel by nearly Nu 4.

A liter of petrol now costs Nu 70.91and diesel Nu 69.42 in the capital. These are the highest rates since July 2014.

Dophu Dukpa, a taxi driver said fuel prices are rising every week which makes it difficult to fix taxi fare as passengers are not willing to pay higher rates.“We can’t increase the taxi fare as we will be penalized by the RSTA and going long distance is okay but short routes causes loss.”

Jamphel Tshering, a private employee said the government has no control over the fuel hike as fuel comes from India and the low-income people who travel by private car, bus and taxi are affected the most.

Pema Chenzom, a hotel employee said the bus and taxi fares have been constantly increasing and they have to pay as per demand.

However, the constant increase in fuel prices since May have not really impacted the inflation rate. Since reaching 2.62% in May, the inflation rate has dropped to 2.01% in July.

This means that prices of food and non-food items are increasing at a slower speed. Figures since August are yet to be released by the National Statistics Bureau (NSB).

Lhendup Dorji, a government employee said it’s difficult to drive around with the rise in fuel price and he has stopped going on rides with friends.

A Thimphu resident, Tashi Dendup said there are already rumors that increase in fuel price will also result increase in food price which will have severe impact on low income people because households spend more than half of their income on food and rent and only a tenth on fuel.

An economic affairs ministry official said it is a chain reaction that once started will affect all. Increase in fuel price will increase the transportation cost, increase in transportation cost will increase in price of goods, and this increase in price of goods would gradually force the people to spend more.

The hike in fuel prices is due to less production of oil in the Organization of the Petroleum Exporting Countries (OPEC) and hike in crude oil price in the international market.

Last November, the government announced a reduction in petrol price by Nu 10.29 a liter and diesel by Nu 7.75/liter after the Government of India exempted the levy of excise duty on petrol and diesel. The price of petrol was Nu 54.11 a liter and diesel Nu 50.57 a liter on November 11 last year.

Tshering from Thimphu