Fuel prices increased by about 28.9 percent in mid-September this year compared to the same month last year, as petrol saw hike by 32.65 percent and diesel by 25.12 percent.
The price of petrol was recorded at Nu 75.38 and Nu 72.07 for diesel in Thimphu as of September 16.
As per the National Statistical Bureau’s consumer price index, the fuel prices increased by around 33 percent in July this year compared to the same month last year.
Chief trade officer of department of trade under economic ministry, Rinchen Lhazom, said the fuel price is determined by the global oil price in the international and oil producing countries.
“We import from India. However, India does not have the 100 percent oil refineries and they rely on import from other oil producing countries,” she said.
Fuel price is also determined by the dollar exchange rate. There will be increase in the fuel price if rupee value devalues to dollar.
The fuel prices saw a drastic drop to Nu 39 to Nu 46 for petrol and Nu 32 to Nu 37 for diesel in June last year because of the lockdown and Covid-19 containment measures.
Bhutan has signed MoU with India to revise the fuel prices on every first day and 16th of the month.
Unlike India where price revision is done daily, it would be inconvenient for Bhutan since import from India takes at least two days and another one or two days to distribute to other parts of the country, Rinchen Lhazom said.
“With countries globally opening up economic activities and dollar value appreciating, the fuel price will rise,” she added.
Currently, fuels are taxed 10 percent (5 percent green tax and 5 percent sales tax) in Bhutan. The government has proposed to implement goods and services tax (GST) from July 1 next year. If the GST on fuel is more than 10 percent, the price would become costly.
Edited by Jigme Wangchuk