A much-cherished crude-oil refinery will now be built through fresh competitive biddings as the interim government Thursday cancelled controversial S Alam Group's deal and made the latest decision.
The long-delayed refinery project, 'installation of ERL unit -2', will be implemented under public procurement rules (PPR) -2008, the energy and mineral resources division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) decides.
State-run Bangladesh Petroleum Corporation (BPC) will estimate the overall project cost by taking into account the latest foreign-currency rate, prepare the development project proposal (DPP) and send it to the Planning Commission for approval.
An MPEMR meeting, chaired by adviser for power and energy, and road transport and bridges Muhammad Fouzul Kabir Khan, made the decision.
Officials said prior to the fall of the previous authoritarian government, the then prime minister's office had approved a proposal on building the new oil refinery under public-private joint venture with majority stakes going to the acquisitive S Alam Group.
Earlier, the BPC had sought necessary funds worth around US$2.0 billion from the government to build the proposed 3.0-million-tonne-capacity crude-oil refinery in Chattogram.
Eastern Refinery Ltd (ERL), a wholly owned subsidiary of BPC, is set to implement the project.
Sources said Bangladesh had 'failed' to build any crude-oil refinery over the past half a century after its independence, resulting in huge waste foreign currencies gone into import of refined oils from the international market.
Only 'negligence' on part of the authorities concerned is to blame, they added-in an indication of dominance of rent-seeking import lobbies.
The country's currently operational maiden refinery - Eastern Refinery Ltd - was built way back in 1968 by French company Technip, three years before the emergence of Bangladesh from the Pakistani rule.
The volume of petroleum-oil imports has increased around threefold over the past five decades to feed growing consumption in transport, industries and other commercial outlets with the expansion of the country's overall economy.
Technip carried out the front-end engineering and design (FEED) a couple of years back for the new refinery. The BPC had been in talks with Technip over the past several years to have the refinery built through a negotiation bypassing tender process.
The contractor of ERL's existing refinery was interested to build the proposed refinery under an unsolicited deal-in line with the precedence of quick-rental deals in the energy sector, now ditched with the regime change.
An Indian consulting firm, Engineers India Limited (EIL), had been engaged with the proposed project as consultant for the past several years until early 2024 before the emergence of upstart S Alam Group to lay stakes on the project, they added.
The Indian consultancy, EIL, had estimated that the cost might be around $1.80 billion if the engineering, procurement and construction (EPC) contractor was selected through competitive tendering.
The EIL's consultancy cost for the project was around Tk 2.56 billion.
The Technip-done FEED work was also reviewed and accepted by the BPC in consultation with the EIL, which was carried out at a cost of around Tk 3.72 billion.
Once implemented, the new refinery can help the country save $220 million per annum, trebling the country's crude-refining capacity to 4.5 million tonnes from the existing 1.5 million tonnes per year, market-insiders say.
To implement the project the BPC purchased land for the refinery at Tk 2.30 billion from the Ministry of Industries.
"It is sheer negligence from the government high-ups as it could not build a new refinery even over the past 50 years," energy adviser of the Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam told the FE.
"A vested quarter having nexus with government high-ups has been lingering the project's execution to earn money as commission," he says, in tune with usual quips over import preference.
"Consumers are the ultimate losers," he laments.
Building the oil refinery through competitive bidding will ensure execution of the project in a transparent and accountable manner, says energy-expert Prof M Tamim, who was a special assistant of a previous caretaker government.
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