Finance ministry sources said upon suggestions from the International Monetary Fund (IMF), the government conducted the study on financial loss for underpricing of natural gas, power and petroleum products.

The study reveals that 55 per cent of the total subsidy against petroleum products benefited the rich while the figure is 65 per cent in case of subsidy against gas.

"The government incurs a Tk 1,030 fiscal cost for every Tk 100 of subsidies reaching the poorest income group," a finance ministry source said quoting from a recent IMF report.

He said two-thirds of the total subsidy went to two petroleum products, namely diesel and kerosene.

Referring to the increasing oil prices in international market, he said the finance ministry is concerned about the oil price hike.

The price of oil was $78 per barrel yesterday, the official said, apprehending that the price may climb to $100.

On government plan to adjust fuel prices, a high official of the energy ministry said the government will not go for fresh price hike of fuels considering the upcoming national election.

"To face the crisis of fuel price hike, the government should ask the World Bank and ADB for special assistance," he suggested.

According to Bangladesh Petroleum Corporation, diesel and kerosene consumption is around 75 per cent of the total need for petroleum products and the government study shows that of the total implicit subsidy, Tk 6,500 crore was allocated against them.

The government recently increased the prices of diesel and kerosene by 10 per cent and those of octane and petrol by 30 per cent to reduce loss.

Energy ministry sources said the recent price increase will save around Tk 1,700 crore of the total loss. "But, this is a small effort to check the continuous huge loss and the situation is getting worse with the recent price hike of oil in international market," an official said.

He predicted that chances are very little that the oil prices in international market will reduce in the next two or three years.

On the other hand, power and fertiliser production consumes around 75 per cent of the country's total natural gas and the government has to subsidise Tk 700 crore to ensure gas supply to these plants.

The study said there is a price gap of Tk 23 and Tk 30 per million cubic feet (mcf) in case of consumption of natural gas by power and fertiliser plants.

It observed that gas subsidies to power plants, using almost half of the gas products, did not benefit the poor because of their very limited use of power.

For power prices, Tk 1,300 crore has gone as implicit subsidy per year, the report said.

The power ministry recently sent a proposal to the Prime Minister's Office to increase prices of power in urban areas. "But, the loss in the power sector will not decrease even if the new price is implemented," said a ministry official.

Both the IMF and World Bank advised the government to introduce energy price formula to reduce the huge gap between costs of production and selling power and energy related products.

If the energy price formula is introduced, the government will adjust the selling costs of power and petroleum products every six months, a finance ministry official said.

He, however, said the government is not interested in introducing the formula ahead of the election. The next government will decide on the matter.