The government's decision to allow the private sector to import furnace oil has given rise to problems in fuel-supply chain for oil-fired power plants.
The decision has resulted in oversupply of the fuel leading to payment of heavy demurrage to foreign oil tankers by the Bangladesh Petroleum Corporation (BPC).
The state-run BPC is now struggling with its imported furnace oil as its principal buyer, the Bangladesh Power Development Board (BPDB), is not lifting furnace oil in accordance with its previous commitment, BPC chairman AM Badrudduja alleged.
He said the BPC's furnace-oil import has already exceeded its storage capacity of around 100,000 tonnes, thus halting unloading of the fuel from new tankers.
"We are also paying compensation to the owners of oil tankers due to overstay with furnace oil in our jetty," Mr Badrudduja said.
The BPC is already paying demurrage to individual foreign tankers at a rate of US$15,000 a day for their stay over the usual permissible period of 108 hours at the port jetty in Chittagong, he said.
"If the situation continues, we will have to cut some import orders of furnace oil," he added.
The BPDB is receiving only around half the quantity of furnace oil it committed to receiving, the BPC chairman alleged.
The BPDB, the country's lone buyer of electricity from the power plants, had committed to receiving around 1.2 million tonne of furnace oil from the BPC in 2015 to consume itself and supply to some other privately-owned power plants for electricity generation, he said.
But it is now taking less furnace oil as many power-plant sponsors have started importing furnace oil independently.
When contacted, a former Power Cell director-general, BD Rahmatullah, said the government's 'faulty' policy of allowing the owners of oil-fired rental and quick-rental power plants to import furnace oil has given rise to many distortions.
The private sector is getting 9.0 per cent service charge from the government against its import of furnace oil, which is seen to be the main cause of the private sector's scramble for furnace-oil import, he said.
The decision to allow the private sector to import oil is also contributing to the capital flight, Mr Rahmatullah added.
The National Board of Revenue (NBR) is also being deprived of substantial revenue in the form of duty, value-added tax (VAT) as the private power-plant sponsors are exempted from paying such duties, he added.
Officials said the BPC has already been forced to issue no-objection certificate (NOC) to allow private-sector import of furnace oil.
The BPC now fears a continued slump in business of its three subsidiary oil-marketing companies -- Meghna Petroleum Ltd., Jamuna Oil Company Ltd. and Padma Oil Company -- as the oil-fired power plants have been allowed to import furnace oil at will.
Before private-sector involvement in oil business, the BPC used to import and supply required quantity of fuel to almost all private and publicly owned power plants through its subsidiary firms for electricity generation.
When contacted, BPDB chairman Md Shahinul Islam Khan admitted that the Board was not taking delivery of the quantity of furnace oil it had promised earlier.
"This is the fault of BPC as it has allowed new power-plant sponsors to import furnace oil on their own for electricity generation and the latter has started importing accordingly," he said. Had the BPC not provided the permission to them, the private owners had to purchase furnace oil from the BPDB, Mr Khan said.
The government has so far permitted around two dozen new sponsors to import furnace oil.
The country's furnace oil-import volume has been rising significantly as it has reduced its dependence on natural gas for power generation by setting up dozens of furnace oil-fired power plants.
It began importing furnace oil from mid-2010, when furnace oil-fired power plants began coming up.
Prior to that, Bangladesh was a regular furnace-oil exporter.
Currently, the country has 39 oil-fired power plants, of which 28 with an overall generation capacity of 2,133 megawatts (MW) are run on furnace oil.
mazizur.rahman@outlook.com
