The government is now scrutinising a technical proposal of China Huanqiu Contracting and Engineering Corporation (Hqcec), a subsidiary of state-owned China National Petroleum Corporation (CNPC), to build a new 3.5 million tonne per year capacity refinery, a top official said.
The Chinese firm submitted the technical proposal to the state-owned Bangladesh Petroleum Corporation (BPC) after a series of meetings with top officials of BPC and the Energy Division under the Ministry of Power, Energy and Mineral Resources, he said.
On completion of the technical evaluation, the Chinese firm will submit a financial proposal for consideration, said the official.
If the technical and financial proposals are acceptable, the BPC will ink a deal with the Hqcec under government to government arrangement to build the refinery, he added.
Under the existing rules, state-run entities of Bangladesh can sign deals with similar entities of other countries to implement any project, without any tendering process.
The Chinese firm initially offered to build the 3.5 million mt/year capacity refinery on turnkey basis in May.
The Chinese firm has shown interest to build the refinery under buyer's credit with an interest rate of 2.7-2.9 per cent to be repaid by Bangladesh within 15 years with initial three years as grace period, he said.
It has also offered to carry out a feasibility study at US$2.2 million on building the crude oil refinery near Chittagong port.
Hqcec has assured to complete the feasibility study within three to five months.
The BPC is currently struggling to arrange funds to build the country's second refinery with a capacity of 3.5 million tonne per year at a cost of around $1.2 billion.
BPC's subsidiary the 1.5 million tonne per year capacity Eastern Refinery Ltd is the sole oil refinery of the country.
BPC is also in talks with Kuwait Petroleum International, to set up a separate oil refinery with a capacity of 4.0-5.0 million tonne per year under a joint venture (JV).
Building the new refineries would reduce BPC's import costs by around Tk 7.0 (9.0 US cents) per litre, the BPC official hoped.
BPC plans to import 5.67 million mt of crude oil and refined products in
the 12 months ending June 2014, up 11.17 per cent year on year, in order to meet the mounting demand.
The country's demand for fuel is increasing rapidly after a shortfall of natural gas forced the government to turn power plants into oil-fired to ease electricity crisis.
It built three dozen new oil-fired power plants over the past three years resulting in increase of the country's overall oil consumption from mid 2010.
State-owned Bangladesh Petroleum Corp., the country's petroleum import and marketing monopoly, used to import around 3.50 million tonne (mt) products per year before the new plants came online.
He said BPC's imports had increased by 45.71 per cent to around 5.1 million mt of products in the fiscal year that ended June 30.
BPC currently has term deals for refined products imports with Kuwait Petroleum Corp.; Petco, the trading arm of Malaysia's state-owned Petronas; the Philippine National Oil Co.; Emirates National Oil Co.; Egypt's Middle East Oil Refinery; Maldives National Oil Co.; state-owned PetroChina; and Indonesia's Bumi Siak Pusako.
It also has deals in place with Saudi Aramco and
Abu Dhabi National Oil Corporation to import crude oil.
