DHAKA, Nov 3: The World Bank has asked Bangladesh to raise domestic oil prices in order to reduce pressure on the national budget, a financial adviser of the interim government said on Saturday.

The state-run Bangladesh Petroleum Corporation (BPC), the country’s sole importer and distributor of oil, subsidise oil products and is now incurring losses approaching $44 million each month, officials have said.

It raised domestic oil prices by up to 21 per cent in April to try to stem the losses but since then oil prices on world markets have rocketed to all-time highs, with US light crude oil reaching high of a more than $96 per barrel on Thursday. World Bank President Robert Zoellick, in Dhaka for an official two-day visit to Bangladesh, said the government would have to adjust prices to relieve pressure on the budget.

“We have sought assistance from the World Bank chief to tackle challenges emerging from high prices in international oil markets,” A. B. Mirza Azizul Islam told reporters.

“The World Bank president informed us that keeping the soaring oil prices in mind in international markets, a number of countries have already adjusted the prices and we have to think on the issue,” Azizul said.

Bangladesh’s outstanding domestic borrowing rose sharply to 102.65 billion taka ($1.5bn) in the first quarter of fiscal 2007/2008, due mainly to high oil prices, officials said.

The army-backed interim government, in its national budget for fiscal 2007-08 had assumed liabilities of 75.23 billion taka relating primarily to the accumulated loss of BPC, they said.“To maintain the deficit in the budget is now a great challenge for us,” Azizul said.

Devastating floods swept through almost two-thirds of Bangladesh between July and September this year, destroying rice with and estimated value of 42.5 billion taka.

“We have also sought financial assistance from the World Bank to face the challenges and he promised to provide $205 million assistance to Bangladesh,” Azizul said.

The World Bank has already sanctioned a $75-million soft loan to Bangladesh as emergency assistance after the floods, which killed more than 1,000 people made millions homeless.

Agricultural officials say almost 2.6 million tons of rice were lost in floods.—Reuters