Government plans to import 1.2m fuel at low cost

Shamim Jahangir

31st May, 2020 10:12:21 printer

Government plans to import 1.2m fuel at low cost

Bangladesh is likely to get a 20-year lower ever international petroleum fuel product benefit as it allows two fuel suppliers -- Unipec Singapore and Indian Oil Company Ltd (IOCL) -- to import 1.20 million tonnes of diesel, jet fuel and octane immediately under a competitive bidding. 

The government is also expected to get a 50-percent lower price of procuring these petroleum products compared to last year despite the freight fare being so high.

“We have already selected a Singaporean firm and an Indian firm to purchase the products once the ministry approves,” a top official said.

The Bangladesh Petroleum Corporation (BPC) has moved to import the fuel following the instruction of the Ministry of Energy.

State minister for Power and Energy Nasrul Hamid said the ministry has instructed the concerned authorities to import the fuel.

The Unipec Singapore and Indian Oil Company Ltd (IOCL) have offered best proposals to supply 1.20 million tonnes of refined fuel oil products to Bangladesh Petroleum Corporation (BPC) during July-December period 2020.

Despite the companies’ offer of comparatively higher premium rates, the government is expected to get a 40 to 50-percent lower tariff of petroleum fuel in fiscal year 2020 in comparison with that in the previous year, a top official said.

“We have submitted proposals before the Ministry of Power and Energy to allow Unipec and IOCL as their proposals are comparatively lower than those by other international suppliers,” a senior official of BPC said.

BPC's import costs will be lower as lower tariff is offered by suppliers compared to its previous tender despite the higher premium.

The companies, if chosen finally, are expected to deliver petroleum products during the July to December period in 2020.

The premium rates they offered are higher compared to BPC's existing premium rates for importing such products under term deals.

Premium rates will be added to international oil price to determine the state corporation's oil import costs.

BPC plans an import of 870,000 tonnes of 0.05 per cent sulfur gasoil (diesel), 120,000 tonnes of jet fuel and 30,000 tonnes of 95-octane gasoline.

The state corporation will import the products under the tendering system in the second half of 2020.

According to BPC officials, they have received offer from half a dozen of companies and selected the two firms.

A final deal will be inked over oil trading after getting the nod from BPC board and cabinet committee on public purchase.

The high-profile panels usually award oil tenders to the best bidders.

BPC intends to import petroleum products under four groups, namely Group A and Group B on a CFR (cost and freight) basis at Chattogram port.

The Bangladesh Petroleum Corporation (BPC) has floated an international tender to import gasoil, jet fuel, and 95-octane gasoline in two packages.

The corporation floated the tender on May 7, 2020 and opened the quotations on May 17, 2020. A total of seven international companies bid in the tender, official of the BPC confirmed.

Indian Oil Corporation is the lowest bidder for package "B" for supplying 430,000 tonnes of diesel and 50,000 tonnes of jet fuel during July-December and 30,000 tonnes of gasoline in July and December, said BPC sources.

Besides, Unipec is the lowest bidder of the tender for package "A" for supplying 440,000 tonnes of gasoil and 70,000 tonnes of jet fuel.

Unipec offered a premium of $3.85 per barrel to Mean of Platts Arab Gulf (MOPAG) to purchase diesel on a CFR basis and $4.20 per barrel for jet fuel, sources confirmed.

The same company offered a premium of $2.33 per barrel to purchase diesel on a CFR basis and $3.32 per barrel for jet fuel last year.

The premium of the company has raised in the period of July and December, 2020 as most of the freights have spent busy time taking the advantage of lower market prices of petroleum products……………the freight cost increase to 100 percent to 150 percent now, said BPC officials.   

Meanwhile, IOCL offered a premium of $2.60 per barrel for diesel, $3.58 per barrel for jet fuel and $4.48 per barrel for octane.

BPC had imported 1.06 million tonnes of petroleum products in the first half of 2020.

It imported 1.40 million tonnes of diesel, jet fuel, furnace oil and octane combined in the first half of 2019.

It imports annually an estimated 4.5 million tonnes of fuel products including 3.5 million tonnes of diesel, 400,000 tonnes of jet fuel and 100,000 tonnes of octane to meet local demand.

The state corporation sources said almost half of its oil products come through open tenders and the remaining half through government-to-government negotiations.

Kuwait Petroleum Corporation, Malaysia's Petco Trading Labuan Company, Emirates National Oil Company, PetroChina, Chinese Zhenhua Oil Company, Petrolimex Singapore of Vietnam, Philippine National Oil Corporation, Indonesia's Bumi Siak Pusako and Oman Trading are major suppliers of BPC under term deals.

A board meeting of BPC held on May 21, 2020 allowed the two companies to supply the fuel products.

According to the Ministry of Power and Energy, the petroleum fuel consumption during last five months has come down almost 20 percent against the requirement.

The government has taken decision to import the required petroleum fuels considering the lower consumption in the first half of the current year.