Construction work of the proposed India-Bangladesh Friendship Pipeline to initiate trading of petroleum oil is being delayed due to complexities over land acquisition, officials said.
State-run Bangladesh Petroleum Corporation (BPC) has decided to engage a third party to ease complexities and complete land acquisition for laying the first inter-country oil carrying pipeline between the two neighbouring countries, a senior BPC official said.
If everything goes smoothly, it would take around eight to nine months to complete land acquisition in Bangladesh part, he added.
Bangladesh and India would, however, constitute a 12-member project review and monitoring committee to ensure smooth implementation of the pipeline project, he said.
A four-member Bangladesh committee held a meeting with its Indian counterpart in New Delhi recently to discuss the progress of the project.
The Indian government is expected to assign an engineering, procurement and construction (EPC) contractor while the project director would be assigned from Bangladesh to implement the pipeline project.
Economic Relations Division (ERD) of Bangladesh would facilitate the project execution.
Of the total length, 125-kilometre pipeline would be constructed inside Bangladesh while 5.0 kilometres in India.
Diesel from India's 3.0 million tonne per year (Mtpa) capacity Numaligarh Refinery Ltd (NRL) of Assam would be transferred to Parbatipur oil storage tanks inside Bangladesh.
India's state-run Bharat Petroleum Corporation Ltd (BPCL) holds a 61.65 per cent stake in the NRL while the government of Assam and Oil India Ltd have 12.35 per cent and 26 per cent stakes respectively.
The BPC would import diesel from the NRL for 15 years at a premium rate of US$ 5.50 per barrel to Mean of Platts Arab Gulf (MoPAG) diesel assessment on cost and freight (CFR) basis meaning that the price would be above US$ 5.50 per barrel from international price of diesel.
This premium rate is, however, more than double the existing premium rate as the BPC has been importing diesel from the international market at a premium rate of around $2.60 per barrel to the MoPAG diesel assessments on CFR basis.
The cost of fuel transportation and the loss from evaporation are covered from the premium.
The NRL authority is expecting to export around 1.0 million tonnes of 0.20 per cent sulphur diesel to Bangladesh for 15 years through this pipeline.
Although the premium rate is higher, India's diesel consignment will save the BPC's expenditure on account of transportation of diesel to Parbatipur from Chittagong port, a senior official of Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) said.
Indian diesel will be consumed by clients in the northern region, once the pipeline is constructed.
Diesel demand is around 1.10 million tonnes in 16 northern districts in Bangladesh, the BPC official said.
Initially, the pipeline is planned to carry around 300,000 tonnes of diesel to Bangladesh, which would gradually be increased to 1.0 million tonnes.
The cross-border pipeline will go through Panchagarh, Nilphamari and Dinajpur to reach Parbatipur oil storage tanks inside Bangladesh.
Separately, BPC has been importing around 2,200 tonnes of 0.035 per cent sulphur gasoil (diesel) from Numaligarh refinery every month through railway.
The BPC will import the similar quantity of diesel for 15 years to Parbatipur through 50 wagons of Indian railways.
It will pay a premium of US$ 5.50 per barrel to MoPAG for diesel assessments on CFR basis.
The BPC currently imports around 5.0 million tonnes of diesel annually to meet local demand.
Bangladesh earlier imported diesel only for a brief period from India and a small quantity of 3,500 tonnes from the BPCL in 2007.
The BPC also imported around 400,000 tonnes of diesel from the Indian Oil Company Ltd during 2005-06, BPC officials said.
