BPC drafting DPP on ERL's 2nd unit

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Nizam Ahmed The Bangladesh Petroleum Corporation (BPC) has been drafting a development project proforma (DPP) to set up the second unit of the country's lone Eastern Refinery Limited (ERL), officials said Wednesday. The ministry concerned has asked the BPC last month to draft the DPP for placement at the Planning Commission for approval after required funds are available from donor agencies. "The second unit has become imperative, as the authorities last year cancelled a proposal to treble the ERL's annual refining capacity to 4.5 million tonnes," a senior official at the BPC told the FE. The capacity of the proposed second unit of the refinery is expected to be three times higher than the existing unit's capacity of 1.5 million tonnes per year, he said. Some $2.0 billion is likely to be required to set up the second unit. However, the estimated cost and proposed capacity would be known when the DPP is finalised, the BPC officials said. The officials are optimistic about getting the fund from the donors, which earlier advised the relevant authorities to set up a new refinery instead of repairing the existing one through BMRE (balancing, modernisation, rehabilitation and expansion). The Economic Relations Division (ERD) is interacting with interested donors to get the fund on time, officials said. The demand for fuel is rising, as the country's more than 50 power plants, set up in the past several years, are fuel-fired. More oil-fired plants are in the construction stage, to boost the country's total power generating capacity to over 7,500 MW by the end of the current fiscal year (FY 2012-13) from the existing capacity of some 6,500 MW, said officials at the Bangladesh Power Development Board (BPDB). The import of crude and refined petroleum products is likely to rise to some 6.0 million tonnes in the current fiscal, from 5.3 million tonnes in the previous FY. Meanwhile, Qatar, Kuwait, Saudi Arabia and the United Arab Emirates have shown interest to invest in the country's energy sector. Officials at the Prime Minister's Office (PMO) are also keen in selecting donors, under the guidance of Prime Minister Sheikh Hasina, also in charge of the energy ministry. The ERL, set up at Patenga near the Chittagong Port in 1968, is a subsidiary of the BPC, the sole importer and distributor of petroleum products and crude oil in the country and a corporate wing of the ministry. In 2011, the joint-venture of IEL Consortium of Germany and its Bangladeshi associate Orion Group won a deal to treble the ERL's annual refining capacity to 4.5 million tonnes through BMRE at an estimated cost of $1.3 billion (Tk 67 billion). But the proposal was cancelled in last September, as the joint-venture firm failed to engage a genuine financial guarantor after winning the deal.