Petrol purchase: Govt in dilemma over renewal of contracts with refineries


Desk Report:

The government is in dilemma over the renewal of contracts with private refineries about the supply of condensate and the purchase of petrol in return from them in the coming years.

According to official sources, state-owned Petrobangla has been annually supplying about 550,000 metric tonnes of condensates to 13 refineries which mainly produce petrol and other petroleum products under separate contracts.

But setting up a new fractionation plant at Rashidpur in Sylhet region by Petrobangla and also the gradual decline in the consumption of petrol by private cars and jeeps have prompted the government to reconsider the amount of purchase of petrol from private refineries, said officials at Energy Division.

They said most motor vehicles, especially private cars and jeeps, prefer to use octane instead of petrol.

As a result, the officials said, the government had to stop the import of petrol from abroad. Instead, it has been buying petrol from local refiners to meet the domestic demand.

They mentioned that a number of private refineries have been set up across the country to produce different petroleum products, including petrol, in the last few years.

These refineries receive condensate from Petrobangla as raw materials for petrol and other petroleum products under the condition that the produced petrol would be sold to Bangladesh Petroleum Corporation (BPC).

This has been made mandatory for the private refineries as the BPC is only allowed to import and sell such products and the marketing of petrol and other petroleum fuel are restricted for private sector.

Officials said ahead of the expiry of existing contracts with the government, the Petro chemical and Refiners Association of Bangladesh (PRAB) wrote a letter to Petrobangla on March 22 to renew their contracts for another five years.

But, Petrobangla forwarded the request letter to the Energy Division seeking its decision over the issue.

Sources said the Energy Division, instead of giving a permanent decision, extended the tenure of the existing contracts for only 7 days on an adhoc basis.

Energy Division officials said they would take the decision after analyzing the whole situation as the consumption of petroleum by cars and jeeps is declining day by day while the government has set up a new plant to produce petrol in Rashidpur in addition to current production in state-owned Eastern Refinery.

Admitting the request of the refiners for renewal of contracts for another five years, deputy Secretary of the Energy Division Md Akramuzzaman said the government would take decision after the meeting of parliamentary standing committee on Energy and Power Ministry on April 3.

Officials said if the private refineries want to produce octane or other petroleum fuel they will have to go for massive modification of their plants which will be very costly for them.

A top official at the BPC informed that the organisation is now supplying 160,000-180,000 mt of petrol and 180,000-200,000 mt of octane to the local market.

He, however, said although the consumption of petrol by cars and jeeps are declining, it is increasing day by day by motorcycles.

But once Petrobangla’s plant in Rashidpur goes into production, it may affect the purchase of such product from the private refiners.      unb


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