Bangladesh's second oil refinery is now in sight as a project with an estimated cost Tk 355 billion in domestic financing awaits ECNEC seal at its next meeting, officials say.
With this decisive initiative by the interim government a prolonged wait for nearly 17 years, after the feasibility study launched in 2008, is going to be over.
The project to set up the second refinery unit of Eastern Refinery Limited (ERL) is set to be placed before the Executive Committee of the National Economic Council (ECNEC) for approval.
The new refinery, with an annual crude oil-processing capacity of 3.0 million tonnes, is in the agenda for the ECNEC meeting to be held next Tuesday, sources at the Ministry of Planning have confirmed.
An official of the Energy and Mineral Resources Division (EMRD) says the country's only existing refinery, established way back in 1968, has a capacity of 1.5 million tonnes-meeting just about 20 per cent of the current annual demand.
Once completed, the new unit would raise the combined refining capacity to 4.5 million tonnes, covering about 42 per cent of the projected annual demand for 10.79 million tonnes by 2030 and thereby substantially cutting import-dependence.
The proposed unit aims to strengthen the country's energy security by producing more environment-friendly fuels and reducing dependence on imported refined petroleum products.
EMRD officials say the plant will produce Euro-5-quality fuels, including octane and diesel, with sulfur content below 10 PPM, adhering to global environmental standards and promoting cleaner air for future generations.
"Implementing the project is also expected to save much-needed foreign exchange by cutting imports of refined petroleum," says one official.
"Additionally, the plant will help boost Bangladesh Petroleum Corporation's (BPC) income by processing various value-added byproducts alongside the production of liquid fuels from crude oil," the project document reads.
The EMRD Secretary, Mohammad Saiful Islam, says the basic design has been completed using Arabian Light Crude (ALC) and Murban crude as feedstock, with arrangements to refine crude from other sources, including Russia, Norway, and Nigeria.
"The second unit will be capable of processing Russian Urals crude or Nigeria's Brass River crude by separately boiling the fuels before refining," he told The Financial Express.
Following the feasibility study, the government first formulated a Tk 130-billion project in 2010, seeking funding from the Islamic Development Bank (IsDB).
The development project proposal or DPP was redesigned in 2023 with an estimated cost of Tk 237.36 billion to search foreign aid.
However, the proposal was later withdrawn to implement the project with funding from the controversial S Alam industrial group, which fell out of government's favour after the previous administration's collapse.
Recently, the EMRD resubmitted the proposal to the Planning Commission with a revised estimate of Tk 429.74 billion funded entirely from domestic sources.
The Project Evaluation Committee (PEC) meeting held last November recommended reducing the project's component-wise costs. Following PEC's suggestions, the EMRD resubmitted the project with a cut-down cost of Tk 354.65 billion, with Tk 212.78 billion as government loans and Tk 141.87 billion from the implementing agency's own sources, resulting in a cost saving of Tk 75.09 billion.
"Upon completion, the project will enable ERL to process 3.0 million metric tonnes of crude oils annually and produce cleaner petroleum products, enhancing the population's access to clean energy and modern fuels," it is stated in the proposal.
The refinery is expected to generate around 60,000 metric tonnes of LPG, 0.6 million tonnes of gasoline, 0.5 million tonnes of jet fuel, 1.1 million tonnes of diesel, and 0.15 million tonnes of bitumen, significantly reducing the country's reliance on imports of these refined petroleum products, it adds.
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