Bashundhara likely to be first private entity to market fuel oil

Bashundhara Oil and Gas Company (BOGCL) is likely to become the first private entity in the nation to get the nod to market products after refinement of imported crude oil, according to officials of the Bangladesh Petroleum Corporation (BPC).

The company already has a bitumen plant from which it sells by-products such as diesel oil to the BPC.

According to BPC sources, around two-three companies applied for registration to establish a crude oil refinery, but the state-owned corporation is only considering Bashundhara's submission.

"It is complying with BPC regulations as they already have businesses with the BPC," said a top official of the state-owned corporation.

He claimed the rest of the companies only provided inadequate one-page submissions, which were declined by the BPC.

The BPC has formed a technical committee, led by its Director (operations) Khalid Ahmed, to analyse Bashundhara's submission.

The committee has already held meetings in this regard, Ahmed told The Daily Star last week.

"We are going through the submission, including their provided documents. We are looking to see if they have met all the criteria," he said.

"We will visit the refinery to check the environment and the quality of their products," Ahmed added.

However, he did not comment on the rest of the submissions.

Bangladesh has only one state-owned oil refinery, the Eastern Refinery in Patenga, which was established in 1968. It has the capacity to refine 15 lakh tonnes of crude oil a year.

Since 2012, the BPC has been submitting project proposals to build a second unit at the Eastern Refinery, with a capacity to refine 30 lakh tonnes of crude oil a year.

But the project has been denied several times due to a lack of funds.

On November 20 last year, the government opened the fuel oil market to the private sector by issuing a gazette notification.

The notification said any private entity, while maintaining the rules and regulations of the BPC, would be allowed to import crude oil from the international market and refine it in their own refinery. They will also be able to market their products themselves.

Bashundhara has a bitumen plant in Keraniganj, which produces diesel and other fuel oils as by-products.

"They are able to sell those by-products to the BPC. But after the new regulations were passed in November, they became able to market 40 percent of their products by themselves for the first three years," said another BPC official, preferring anonymity.

For the two years after that, they will be allowed to market 50 percent of their products, according to the new regulations.

According to the gazette, whoever gets approval must set up a refinery with a capacity to refine 15 lakh tonnes of crude oil.

Another criterion set by the BPC was that any company wishing to enter this segment needs to have turnover of at least Tk 5,000 crore in the previous three years.

This led to some industrialists alleging that the BPC only wanted Bashundhara to get into the market.

In 2018, Bashundhara took the initiative to set up a crude oil refinery in Chattogram's Sitakunda. Initially, Bashundhara had announced plans to set up a plant with the capacity to refine 47 lakh tonnes of crude oil each year.

They initiated fund-raising under a syndication arrangement of Tk 7,457.57 crore in 2021.

But the project is now on hold, said BOGCL officials.

"It was delayed due to the Covid-19 pandemic. We have completed the land development activities, but have yet to start construction," said Nafis Imtiaz Alam, general manager of BOGCL.

In the meantime, the contract between them and a US-based engineering, procurement and construction contractor had ended.

"So, we need to hire another contractor, either the same one or a new one, within a short time," he said, adding that their activities got a renewed push after the gazette notification.

The BOGCL has been selling its by-products from its bitumen plant to the BPC.

"We are going to set up our own depots and refuelling stations to sell the products if we get the nod," Nafis said.

"It will be tough to compete with the most experienced refinery, but we plan to expand our activities and chase them gradually. Currently, while the government produces only 70,000 tonnes of bitumen, Bashundhara refinery produces around 10 lakh tonnes," he added.

At present, Bangladesh has demand for around 70 lakh tonnes of petroleum products, of which around 80 percent needs to be imported as refined fuel at a high cost.