The government has backtracked on its plan to establish a fuel supply company (FSC) with dominance of a private firm for import and supply of furnace oil to country's oil-fired power plants, said officials.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid cancelled last week the tender process through which the FSC was set to be formed and a private firm was to get the authority for import and supply of furnace oil to power plants, a senior official of Power Division told The Financial Express (FE) Tuesday.
State-owned Bangladesh Petroleum Corporation (BPC) and its three subsidiary oil marketing and distribution companies were protesting against the government move to establish the proposed FSC.
Bangladesh Independent Power Producers' Association (BIPPA) and Bangladesh Energy Companies Association (BECA) also opposed the move to set up the FSC with the supreme authority given to a private sector-led consortium to import furnace oil and supply it to power plants.
They submitted letters to Mr Hamid separately to stop the move.
The FE on April 8 ran a story headlined "Fresh move to form private sector fuel supply company, BPC to be sent to the backyard, even denied a stake in FSC," spelling out the possible impact, which was mentioned in a government report before taking the latest decision.
Officials said the selection process of a private firm, which is also involved in electricity generation, having 51 per cent stake in the planned FSC, didn't commensurate the standard procedure for selecting the bidders as it overlooked 'Rules of Business.'
State-run Bangladesh Power Development Board (BPDB) was supposed to be the owner of remaining 49 per cent stake with the proposed FSC, leaving the BPC's stake to 'zero'.
Had the FSC established, the already established supply chain of petroleum products of the BPC and several other privately-owned power plant sponsors would have been shattered, said the official.
"It will be a disaster for the BPC if the government handed over fuel import and supply authority to a private sector-led FSC," BPC Chairman AM Badrudduja said.
He said over the years, the BPC invested billions of taka to increase its capacity to import around 6.0 million tonnes of petroleum products including 1.2 million tonnes of furnace oil by constructing new oil storage tankers.
A dozen privately-owned oil-fired power plants, which were allowed to import fuel of their own to run their power plants, would have been barred from importing it to establish the 'supremacy' of the FSC, he added.
The furnace oil-fired power plants would have been forced in future to purchase fuel from the FSC. All furnace-oil fired power plants under the ownership of BPDB would also have to buy furnace oil from the FSC.
It would have been made mandatory for the independent power producers (IPPs) and rental power plants to purchase fuel from the FSC.
The government was also supposed to pay some 9.0 per cent commission as 'service charge' and offer waiver on import tax for importing fuel from the international market, said the officials.
"This is a very good decision from the government as it will ensure level playing field," an owner of a privately-owned oil-fired power plant told the FE Tuesday requesting anonymity.
"Many privately-owned power plants have already created facilities investing billions of taka after getting permission from the government and others are in the process of creating facilities to look after their own fuel supplies," he added.
Currently, the country imports around 2.0 million tonnes of furnace oil, of which 1.2 million tonnes are being imported by the BPC and the remaining 800,000 tonnes by different private sector entities to feed 28 operational furnace oil-fired power plants having the total generation capacity of 2,133 megawatts (MW).
mazizur.rahman@outlook.com
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