Goods could be costlier by about 6 percent 

Thukten Zangpo 

Fuel prices soared to an all record high from midnight triggered by the Ukraine-Russia conflict earlier this month.

Diesel is priced at Nu 100.59 and petrol at Nu 95.21 a litre in Lungtenzampa, Thimphu today.

Diesel saw an increase of Nu 17.18 (20.59 percent) and petrol Nu 10.67 (12.62 percent). These prices are on five percent green tax and five percent sales tax.

The global oil prices spiked after fears that oil supplies from Russia that account for 10 percent of global crude oil production would be disrupted by western sanctions.



On March 7, international crude oil had touched USD 139.13 per barrel, the highest since 2008, as per the media reports. While crude oil fell below USD 100 a barrel on March 15 as peace talks between Russia and Ukraine sparked hopes of easing global tensions, it added.

However, analysts say that the crude oil prices are likely to remain volatile in the coming week as the geopolitical tensions seem unlikely to end anytime soon.

In an earlier interview, the minister of economic affairs, Loknath Sharma, said that the experts have warned that the crude oil price is set to surpass its record high of USD 150 a barrel.

Bhutan’s fuel price is affected by the global crude oil price and the exchange rate of the Indian rupee or Ngultrum since India imports 85 percent of its oil needs and Bhutan depends on India for fuel.



The pandemic and increasing fuel prices have also made the price of goods costlier. The price of consumer goods and services in January this year went up by 6.03 percent.

With the current increase in the fuel price by 16.6 percent, the goods could be costlier by about 6 percent within a month.

The Royal Monetary Authority’s study on the impact of fuel price on inflation in 2021 found that an increase in fuel prices by 10 percent would increase monthly inflation by 3.6 percent within a month and further push inflation by 1.3 percent after three months.

“If fuel prices increase by 10 percent, other factors remaining constant, the total increase in inflation will be 4.9 percent after three months from now,” it added.



Lyonpo Loknath Sharma, said that the Covid-19 protocols alone increased transportation costs to 7.2 percent and higher, 

He added that wholesalers are advised to increase the stock of goods a little above normal in case of prices increase in India. “There are global efforts to stabilise prices and India is trying on its own as well which will ease our situation as well.”

With the fuel price increase, there was also speculation that the prices of fuel stocked would be sold in the market at a new increased rate.

However, director-general of department of trade, economic affairs ministry, Sonam Tenzin, said that the stocks maintained are for emergencies, and oil distributors only maintain the running fuel stocks.



As per the department of trade, Bhutan has a petrol stock of 1,733 kilo litre (KL), adequate for 12 days, and 2,270.76 KL of diesel adequate for 6 days as of March 15.

State Trading Corporation of Bhutan Limited’s general manager, Sugan Pradhan, said that their depot does not have stock facilities and they plan to import from Kolkata, India every week.

Bhutan oil distributor’s (BoD) manager in Phuentsholing, Dorji Drukpa, said that they have a stock fuel of 52 KL for emergencies for the western region which has to be maintained all the time.

He said that BoD distribute oils as per the requirement, and during lockdowns, there was less requirement and it did not have surplus oil.



According to the department of trade, Bhutan’s average estimated daily consumption of petrol is 137 KL and diesel is 410 KL.

The new fuel price will come into effect on the first and 16th of every month as per the memorandum of understanding between Bhutan and India.

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