A fresh construction bid is floated as Bangladesh pays dearly for expensive fuel import following a crisis allegedly created through rendering a new refinery project a lame duck.
Sources have said the state-run Bangladesh Petroleum Corporation (BPC) has sought afresh necessary funds worth around US$2.0 billion from the government to build the proposed 3.0-million-tonne-capacity oil refinery in Chattagram.
The BPC urge for the money came after the exit of French firm Technip from the project.
"We sought the fund to ensure that the much-needed crude-oil refinery can be installed soon," BPC chairman ABM Azad told the FE Tuesday.
The government has yet to respond to its appeal, he said.
Eastern Refinery Ltd (ERL), a wholly owned subsidiary of BPC, is set to implement the project. The government and the BPC are expected to bear the project cost.
Sources say Bangladesh has 'failed' to build any crude-oil refinery over the past half a century after its independence, resulting in huge waste foreign currencies to import refined oil from the international market.
Only 'negligence' on part of the authorities concerned is to blame.
The country's currently operational maiden refinery - Eastern Refinery Ltd - was built way back in 1968 by Technip, three years before the emergence of Bangladesh from the Pakistani rule.
The volume of petroleum-oil imports has increased around threefold over the past five decades to feed growing consumption in transport, industries and other commercial outlets with the expansion of the country's overall economy.
According to the state-run Bangladesh Petroleum Corporation (BPC) Bangladesh imported around 3.30 tonnes of refined and crude oils combined during fiscal year 2001-02 at a total cost of around Tk 38.13 billion. Of the total imports, the BPC imported 2.10 million tonnes of refined and 1.29 million tonnes of crude oils.
After one decade, during FY2010-11, the corporation imported a total of 4.90 million tonnes of refined and crude oils combined, of which 3.50 million tonnes are refined and 1.40 million tonnes crude. The aggregate cost was around Tk 276.62 billion.
And after one more decade, during FY2020-21, Bangladesh's overall petroleum import swelled to around 9.0 million tonnes--4.15 million tonnes refined oil imported by the BPC, 1.43 million tonnes of crude oil and the remaining 3.50 million tonnes furnace oil imported by privately owned power-plant owners.
The total import bill footed from BPC coffers was around Tk 220.39 billion to import 4.15 million tonnes of refined oil and 1.43 million tonnes of crude during the fiscal year.
Private sector's import cost was around Tk 100 billion separately also during FY2020-21.
Before packing its bags, the French firm, Technip, however, carried out the front-end engineering and design (FEED) for the new refinery.
The BPC was in talks with Technip over the past several years to have the refinery built through a negotiation bypassing tender process.
The contractor of ERL's existing refinery was interested to build the proposed refinery under an unsolicited deal.
"The terms of Technip, as proposed to the BPC, were not deemed suitable for us," says a BPC official.
Technip had proposed to build the refinery at an estimated cost of US$2.23 billion before losing interest in the project.
But the Indian consulting firm, Engineers India Limited (EIL), opined that the cost might be significantly lower if built through open and competitive tendering.
The EIL estimated that the cost might be around $1.80 billion if the EPC contractor was selected through a competitive tendering system.
Meanwhile, the contract tenure of IEL has been extended by four more years, totaling seven years, due to the delay in selecting the mode of contractor and other relevant issues, it has been alleged.
Consultancy cost has also more than doubled to around Tk 2.56 billion as a consequence.
The Technip-done FEED work had been reviewed and accepted by the BPC in consultation with the EIL at a cost of around Tk 3.72 billion.
Market-insiders said Bangladesh lost the opportunity to purchase Russian crude oil to refine due to absence of a state-of-the-art crude refinery.
Mismatch of the specifications of Russian crude oil with that Bangladesh refines in its sole refinery -ERL - was the cause, said a senior BPC official.
Sources said Russian crude oil is available at around US$60 per barrel, much lower price than the international price of Brent crude oil, which is now hovering around US$90 per barrel.
Once implemented, the new refinery can help the country save $220 million per annum, trebling the country's crude-refining capacity to 4.5 million tonnes from the existing 1.5 million tonnes per year.
To implement the project the BPC purchased land for the refinery at Tk 2.30 billion from the Ministry of Industries.
"It is sheer negligence from the government high-ups as it could not build a new refinery even over the past 50 years," energy adviser of the Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam told the FE Tuesday.
"A vested quarter having nexus with government high-ups is lingering the project's execution to earn money as commission," he said, in tune with usual quips over import preference.
"Consumers are the ultimate losers," he laments.
