Import of diesel from India through the maiden intra-country oil pipeline is all set to start on March 17, a national holiday in Bangladesh on its independence leader's birthday.
Indian Prime Minister Narendra Modi and Bangladeshi premier Sheikh Hasina are expected to inaugurate operation of the India-Bangladesh Friendship Pipeline jointly through videoconferencing, a senior official of Bangladesh Petroleum Corporation (BPC) told the FE Sunday.
The inaugural-day operation of the pipeline coincides with the birthday of Bangabandhu Sheikh Mujibur Rahman.
"Construction of the pipeline, which began in early 2020, has already been completed and the facility now waits to be commissioned to carry diesel from India," he said.
The 130-kilometre pipeline cost around 3.46 billion Indian rupees drawn from the Indian line of credit (LoC).
Of the total length, 125-km stretch is inside Bangladesh territory and 5.0-km inside India.
The pipeline passes through Panchagarh, Nilphamari and Dinajpur to Parbatipur oil storage inside Bangladesh.
With the commencing of operation of the cross-border oil pipeline Bangladesh will cease importing diesel from India by rail.
Currently Bangladesh imports around 2,200 tonnes of diesel every month from Numaligarh Refinery Ltd (NRL) through West Bengal Railway and the BPC carries the fuel through Bangladesh Railway to Parbatipur oil depot in the country's northern region.
The state-run petroleum corporation will purchase this diesel from NRL for 15 years at a premium rate of US$5.50 per barrel to Mean of Platts Arab Gulf, or MoPAG, diesel assessment on cost-and freight (CFR) basis.
MoPAG is the benchmark in oil-pricing formula prepared by Platts, a US-based energy-information provider and analyser.
The cost of fuel transportation and the loss from evaporation are covered from the premium.
"Diesel import through the pipeline will save BPC time, expenditure and hassle on account of transportation of diesel from Chittagong Port to Parbatipur," says a senior official of the Ministry of Power, Energy and Mineral Resources (MPEMR).
Initially, the pipeline is likely to carry around 250,000 tonnes of diesel per annum into Bangladesh.
The volume will be gradually increased to 400,000 tonnes per year during the first five years, from where the import quantity will increase to around 1.0 million tonnes a year.
Bangladesh might import diesel beyond the already-agreed 15 years following mutual decision, the official adds.
Indian diesel will be consumed by clients in the agrarian northern region, having 16 districts, where the annual diesel demand is around 1.10 million tonnes.
The national annual demand for this petroleum fuel is around 5.0 million tonnes-mostly met with imports from the global market. Only half a million tonnes of diesel comes from domestic refining of crude oil.
Bangladesh earlier imported diesel from India only for a brief period and in a small quantity of 3,500 tonnes from the state-run Bharat Petroleum Corporation Ltd (BPCL) in 2007.
BPC also imported around 400,000 tonnes of diesel from Indian Oil Company Ltd during 2005-06, said sources.
