State-run Bangladesh Petroleum Corporation (BPC) could avoid the demurrage claims by the international oil suppliers during the recent spate of coronavirus induced restrictions as the oil cargoes had not been required to overstay in the ports to unload fuel.
Unlike the last year's lockdown, the BPC received all the cargoes during the last phase of virus-induced curbs enforced since April 14 as local demand for petroleum products did not shrink significantly, BPC chairman Md Abu Bakr Siddique told the FE on Sunday.
Consumption of A-1 jet fuel, however, fell sharply due to suspension of international flights.
However, the domestic flights remained operational on a limited scale with low frequency to several destinations.
On the other hand, the consumption of diesel, petrol, octane and furnace oil declined but not to an alarming level. So, the BPC did not cancel any oil import cargo.
Only the intercity buses, trains and launches did not continue their services during the recent spate of Covid-19-induced restrictions, but all types of private transport and intra-city buses remained operational until May 23.
The government, however, decided on Sunday to allow operations of intercity transport on a limited scale from Monday.
During the previous year's lockdown or public holidays, around a dozen of oil cargoes had to stay more than the stipulated period of 120 hours and several cargoes stayed even for over one month as the state-run corporation had not enough oil storage facility to unload fuel from the cargoes.
Consequently, the BPC and the global oil suppliers were still at loggerheads over execution of the 'force majeure' provision over the demurrage payment on petroleum product supply and delivery during the Covid-19 pandemic in 2020.
The BPC has sought execution of the 'force majeure' provision to avoid the payment of 'demurrage' caused by the overstay of the oil cargoes in jetties or sea.
But the oil suppliers were not interested in executing the 'force majeure' provision as the country's sea ports were operational during the coronavirus pandemic.
Force majeure is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, epidemic or an event described by the legal term as an act of god prevents one or both parties from fulfilling their obligations under the contract.
Apart from the overstay of around a dozen of cargoes, the BPC had to cancel or defer 17 oil cargoes from April to July last year due to lower oil demand and lack of adequate storage facility.
Each cargo consists of an estimated 30,000 tonnes of oil products.
The corporation had to halt operation of the country's lone crude oil refinery for around a week in June last year due to no scope of further storage.
The BPC subsequently had to cancel one 100,000-tonne Murban crude oil term cargo from Abu Dhabi National Oil Company (ADNOC) in June 2020.
The BPC currently has a total storage capacity of 1.32 million tonnes of oil products, which include diesel, furnace oil, petrol, octane, kerosene, bitumen, condensate and crude oil.
But due to lower petroleum consumption during the general shutdown from March 26 to May 30 in 2020 along with subsequent limited scale office and commercial operations, the BPC's oil tanks became full.
The corporation is the sole importer of petroleum products in the country, except high sulfur fuel oil, and usually imports around 6.0 million tonnes annually, including 1.4 million tonnes of crude oil.
BPC currently imports petroleum products from around a dozen of global suppliers including Saudi Arabian Oil Company, or Saudi Aramco, ADNOC, PETCO Trading Labuan Company Limited (PTLCL), Emirates National Oil Company (Singapore) Pte. Ltd. (ENOC), Petrochina (Singapore) Pte. Ltd, PT. Bumi Siak Pusako (BSP), Unipec Singapore Pte Ltd. PTT International Trading Pte, Numaligar Refinery Limited (NRL)
Azizjst@yahoo.com