The government is set to allow the private oil-fired power plant owners to import furnace oil without prior permission from the state-owned Bangladesh Petroleum Corporation (BPC), a top government official said.
The private oil-fired power plant owners would not require no objection certificate (NOC) from the BPC under the new arrangement, said the official of the Ministry of Power, Energy and Mineral Resources (MPEMR).
Most of the oil-fired rental and quick rental power plant owners would go for importing of furnace oil independently taking benefit of the proposed mechanism to make 'hefty profits' as there would be none to look after their imports, it has been alleged.
There might be massive capital flight regularly by the oil-fired power plant owners, the official feared.
The government would not get large amount of money as value added tax (VAT) and customs duties from the BPC as well, as the privately owned power plants are already exempted from paying VAT, said the official.
The BPC provided around Tk 8.44 billion to the government exchequer as VAT in the last fiscal year 2012-13 against imports of around 1.20 million tonnes of furnace oil, said sources.
On the contrary, the government would have to count extra money at the rate of 9.0 per cent for payment to the private oil-fired power plant owners as service charge, they said.
Instead of getting VAT and customs duties from BPC against fuel imports, the government would have to pay 9.0 per cent service charge against free on board (FOB) prices of furnace oil, freight charges, insurance, handling commission, port duties, inland transportation cost and storage charge of the fuel, said the sources.
Officials said the EMRD has moved for allowing the private oil-fired power plant owners to import fuel exempting the mandatory NOC requirement from BPC following repeated demands from them.
They have demanded import of oil on their own arguing that BPC has been supplying substandard fuel to power plants, which they said have caused mechanical problems to the power plants. They claimed that they incur huge revenue loss due to substandard quality of oil being imported by BPC.
BPC officials, however, refuted the allegation saying that they have been importing fuel from international market after ensuring required quality and supplying oil to power plants as per their requirements.
Over two dozen private oil fired power plant owners have sought permission from the government to import oil for generating electricity, he said.
These privately owned oil-fired power plants, having the total electricity generation capacity of around 2,000 megawatts (MW) of electricity is interested to import furnace oil and diesel on their own to run their power plants.
Despite having opposition, BPC has already bowed down to the pressure of government high-ups and issued NOCs to several privately owned oil-fired power plants.
BPC feared to have its new fuel storage tanks empty and all of its three oil marketing companies -- Meghna Petroleum Ltd., Jamuna Oil Company Ltd. and Padma Oil Company -- see slump in businesses, if the oil-fired power plants are allowed to import furnace oil at will.
Currently, BPC imports and supplies the required quantity of fuel to almost all privately owned power plants for electricity generation.
Allowing fuel import by private sector might increase electricity purchasing costs of state-owned Bangladesh Power Development Board (BPDB) from these plants as it would have to pay an additional 9.0 per cent charge to them.
Currently, BPDB pays BPC the fuel import costs but does not pay any service charge.
When contacted, Special Assistant to former caretaker government Professor M Tamim, said that he has urged the government to calculate benefit of common people before taking such important decision.
It would be nothing but a mechanism to allow making money by a section of people, if it does not reduce electricity generation costs, said Mr Tamim, who also teaches in Bangladesh University and Engineering and Technology (BUET).
The government had launched a drive to increase oil-based power generation in mid-2010 amid fast-depleting natural gas resources, and commissioned nearly three dozen new oil-based power plants by the end of 2013.
Currently, 35 oil-fired power plants are operational across the country.
Of the total, 23 with a combined generation capacity of 1,787 MW are run on furnace oil and 12 with a capacity of 393 MW on diesel.
BPC has planned to import around 5.6 million tonnes of crude and refined petroleum products to meet the growing needs including for power plants in 2014.
