BPC plans Tk 19,769cr energy security project

Special Correspondent: The Bangladesh Petroleum Corporation (BPC) wants to meet the country’s petroleum needs and strengthen energy security. For this, the organization is undertaking a project worth Tk 19,768.94 lakh 95 thousand. BPC will spend the entire amount from its own funds to implement this project titled ‘Instalment of ERL Unit-2’.
After receiving the proposal from the Ministry of Power, Energy and Mineral Resources, the Project Evaluation Committee (PEC) meeting was held on August 24. Minutes of the meeting issued on September 5.
According to sources, the general manager of Eastern Refinery, the project implementing agency, Raihan Ahmed, presented the background of the project and the basis of acceptance in the PEC meeting.
While detailing the demand and production capacity of petroleum products in the country, he said that Eastern Refinery Limited, established in 1968, is currently capable of processing 1.5 million metric tons of crude oil per year. This is about 20 percent of the country’s total demand. This demand will increase further and the demand will stand at around 8.03 million tons in 2026-2027. Besides, the demand will be around 10.23 million metric tons in 2029-2030.
If the proposed project is implemented, the capacity will increase by another 3.0 million metric tons to 4.5 million metric tons. In other words, even after the implementation of the project in 2026-2027, the shortfall in demand will remain around 3.53 million metric tons.
He also said, “The approval of the Minister of the Ministry of Power and Energy was taken on June 12, 2014 to implement the project under the Rapid Supply of Electricity and Energy (Special Provisions) Act, 2010.”
For setting up the plant under this provision, under a project titled Feed Services for the Installation of ERL Unit-II, a Memorandum of Understanding was signed with France’s Technip as a single entity to prepare the front and engineering design and execute the work as an EPC contractor.
In addition, Indian Engineers India Limited (EIL) has been appointed as a consultant through another project to provide consultancy services for the main project and FEED project.
The chairman of the PEC meeting is the member (secretary) of the Planning Commission’s Industry and Energy Department. Mohammad Emdad Ullah Mia said, “For the smooth implementation of the project, it is necessary to ensure the guarantee of money and the receipt of a large amount of foreign exchange.” Diversification of raw material sources can be explored to ensure energy security. At the end of the implementation of the project, the initiative of manpower resources to manage the plant should be taken in due time.
He also said, “It can be checked whether the construction of non-plant infrastructure can be done through the Public Works Department.” He has to reconsider taking this stage of converting the existing schools of the institution into colleges. Apart from this, it is necessary to ensure that there is no change in the quality of the plant as the DPP (Development Project Proposal) is formulated according to the cost estimate regarding the non-plant infrastructure construction work and making it based on actual demand.
In the meeting, the joint head of the Industry and Energy Department of the Planning Commission said, ‘Bangladesh Petroleum Corporation (BPC) under the Ministry of Energy and Mineral Resources has proposed this project with its own funding to meet the needs of petroleum products with the country’s internal resources and strengthen fuel security. Implementation is targeted from this year to June 2027.
123.127 acres of land (owned and leased by the organization) will be used for the implementation of the project. Apart from this, another 50 acres of land will be used on rent for 5 years, so the project is approved in accordance with Article 11.2.6 of the Guidelines for Formulation, Processing, Approval and Amendment of Development Projects in the Public Sector this June.
However, Khaled bin Hafiz, financial analyst of the finance department raised questions about the financing of the project. In the PEC meeting, he said, ‘Liquidity certificate was given by finance department on December 15 last year for the proposed project. Eight months have passed and the current global situation has changed drastically since March this year. Due to the increase in the value of the dollar, extreme inflation has occurred worldwide, which has also affected Bangladesh in a big way.
Therefore, the implementation of such projects can be temporarily suspended. Apart from this, it is necessary to ensure whether BPC will be able to meet the cost of such a large-scale project in addition to meeting the costs of the ongoing projects.
According to sources, the proposed project will enable production of eco-friendly Euro-5 standard ganoline diesel and conversion of existing refinery diesel to Euro-5 standard, which will contribute to environmental protection. Another project called Installation of Single Point Mooring (SPM) with Double Pipeline is already under implementation for transporting crude oil to this plant. Through this project, 4.5 million metric tons of petroleum crude oil can be transported annually.
According to BPC calculations, it is possible to save about 9 to 10 dollars per barrel in the case of importing petroleum products by refining crude oil at ERL. The project will be able to fully meet the country’s current demand for gasoline and jet fuel.
In the meeting, the deputy head of the operations department said, ‘What is the current demand for gasoline and jet fuel and whether there is any projection of future demand, if so, that information needs to be added to the DPP. Experiments can be conducted to explore more sources of crude oil in the future from countries currently importing crude oil and to create opportunities to process crude oil from any source in the new plant set up under the project.
Deputy Head of Industry and Energy Department of Planning Commission said, “Despite the implementation of this project, there will still be a shortage of petroleum products in the country.” So BPC needs to take short, medium and long term plans to deal with this shortfall.
The representative of the Ministry of Public Administration said, “The financial and economic analysis of the project has not been done in detail. Economic analysis has only considered financial profit as a benefit.’
The representative of IMED said, “In the financial analysis, the cost of 3 supporting projects related to this project and the cost of land have not been taken into account. Moreover, most of the parts of the project have been kept as cost estimates.
The Head of Industries and Energy Department of the Planning Commission said, “In the development project proposal (DPP), the specifications of furniture and computer equipment have given brand names and pictures which are not correct. It is necessary to ensure that the procurement process of the project will be under which law.
The Joint Secretary of the Department of Energy and Mineral Resources said, “The project will be implemented in accordance with the Rapid Increase in Supply of Electricity and Energy (Special Provisions) Act, 2010.” In this case, the rules and regulations of the law will be followed appropriately.
Regarding the construction work, the senior assistant head of the Oil, Gas and Natural Resources Wing of the Industry and Energy Department said that since the implementation of the big projects in Bangladesh is done through the coordination of the related institutions of the government, therefore, this large-scale project is given the highest priority for the construction work without the plant through the Department of Public Works. would be appropriate to do.
The Additional Secretary of the Energy and Mineral Resources Department said that if the construction work is done through the Public Works Department without the project plant, there may be complications in the arrangement of time.