Pvt sector allowed to import fuel for power plants

The government will allow private entrepreneurs to import diesel and furnace oil from international market to run new oil-based power plants as the state-owned BPC suffers from capacity constraints, officials said Sunday. Bangladesh Petroleum Corporation (BPC), the lone importer of petroleum products, will allow the potential entrepreneurs this week to initiate fuel import, a senior energy ministry official said. BPC will, however, pay the import bill and necessary commissions to the entrepreneurs to encourage fuel import, a senior power ministry official said. He said the government has moved to allow import of petroleum products by private sector due to lack of preparedness on the part of BPC. If private entrepreneurs are not allowed to import fuel, the government will have to count a large sum of money as compensation to the oil-based power plant sponsors for its failure to arrange necessary fuel supply. After taking office in January 2009 the government has inked deals to set up 33 power plants to generate 3,265 megawatts (mw) of electricity Twenty five of the new plants or 75 per cent of the total plants will be run either by diesel or furnace oil. Four of the oil-based plants have already started electricity generation, while the rest are supposed to come online from this month. Under the deals with the power plant sponsors BPC is supposed to arrange fuel supply to the plant site, while PDB is to ensure payment. In default the government or PDB is bound to pay penalty to the sponsors. But the power ministry in a review on the progress of new power plants has identified the loopholes of the BPC and lack of proper arrangement for fuel supply to the plant sites. Absence of coordination among the state-owned Power Development Board (PDB), BPC, Bangladesh Railway (BR) and Bangladesh Inland Water Transport Authority (BIWTA) also emerged as a matter of grave concern, said the ministry official. The government planned to arrange fuel supply to the plant sites either through railway or waterways. But neither the BR nor the BIWTA has come up to meet the fuel supply requirements. BPC officials said the country's fuel requirement increased abruptly due to installation of dozens of new oil-based power plants. The lone state-owned petroleum importer - BPC - might not arrange fuel supply due to lack of necessary infrastructure like transportation and storage facilities, said a BPC official. In 2010, the BPC handled oil import of around 3.78 million tonnes to meet local requirements. But the corporation will have to import an additional 1.4 million tonnes of fuel only to run the new rental, quick rental and public sector power plants in 2011. In 2012, the BPC's import will increase further by 1.0 million tonnes, BPC predicted. When contacted, a private entrepreneur welcomed the government move saying it would ensure timely installation of the oil-based power plants. Currently Khulna Power Company Ltd (KPCL) is the only private sector importer of petroleum products.