The energy regulator asked the power board to gather information about international oil prices before making payment to private importers to check alleged price-fixing and money laundering.
Sources said the Bangladesh Energy Regulatory Commission (BERC) gave the directive to the state-run Bangladesh Power Development Board (BPDB) following widespread allegations about the above-mentioned irregularities.
They said the move, aimed at ensuring transparency in fuel trade under private sector, came six years after the opening of furnace-oil import.
Allegations are rife against private-sector oil importers about tampering with the oil prices both in invoices and marketing locally, which prompted the regulator to act, a senior BERC official told the FE.
"In line with the directive the BPDB must collect international oil price-related information from reliable global sources like Bloomberg and S&P Global Platts and make payment to private-sector importers according to their benchmark pricing," said the official.
Officials said the country currently has around 50 oil-fired power plants, mostly owned by private-sector entrepreneurs many of whom bagged power-plant contracts through negotiation with government high-ups under a 'special law' bypassing tender process.
The power-plant sponsors currently import furnace oil amounting to around 1.5 million tonnes per year independently from the international market to run their plants.
But the private importers of petroleum products are violating government directive on import procedures and continuing brisk business sans transparency, it has been alleged.
The private sector is not providing necessary information to any state agencies during import, which is a violation of the government directive based on which the private sector was allowed to import furnace oil, a senior official of the state-run Bangladesh Petroleum Corporation (BPC) alleged.
"As per the directives, the private importers were supposed to inform BPC about each of their import consignments," he said.
Besides, under the BPC Ordinance the BPC ought to have authority over the overall management of the country's petroleum sector.
But the importers are informing only the BPDB when they require money back from the latter against their fuel imports, said sources.
The BPC officials said if the private sector continued importing furnace oil through violating the government directives, there could be a mismatch in the supply chain inside the country.
The private sector could manipulate the quantity of the furnace-oil imports as well as the prices due to absence of monitoring, they added.
Having been permitted to import furnace oil, the private sector attained waiver of duties on imports.
They are also getting 9.0 per cent service charge along with the fuel-import costs from the BPDB through the reimbursement provision.
BPC has already 'squeezed' importing furnace oil since 2016, making room for doing business by private importers following instructions from the ministry.
The petroleum corporation is now responsible only to supply furnace oil to state-run power plants owned by the BPDB, which it arranges mostly from the output of the country's sole refinery -- Eastern Refinery Ltd (ERL) in Chittagong. The government fixed rate for furnace oil at Tk 42 per litre, at which the BPC sells the fuel to consumers including the BPDB.
But private sector can import furnace oil at rates as low as Tk 25 per litre taking advantage of the lower oil prices on the international market.
It makes room for the private businesses to sell furnace oil in open market and bag hefty profits, the BPC official said.
Contacted, Professor Ijaz Hossain of Bangladesh University of Engineering and Technology (BUET) welcomed the BERC move. "But it should have come much earlier," he said.
Prof Hossain was also critical of the BPDB for not taking step independently to check the alleged price manipulation by the private sector.
