BPC fears losses as pvt power plants look to import oil

The state-owned Bangladesh Petroleum Corporation (BPC) feared incurring heavy financial losses while its oil storage tanks would remain idle, if private power plants were allowed to import oil of their own, a top official said Friday.
All the three oil marketing companies of the BPC-Meghna Petroleum Ltd., Jamuna Oil Company Ltd. and Padma Oil Company-would also bear the brunt of it, he added.
Currently the BPC imports and supplies the required quantity of refined petroleum products to these privately-owned power plants for electricity generation.
But owners of the oil-fired power plants were looking to import refined petroleum products on their own, a senior official of the Power Division under the Ministry of Power, Energy and Mineral Resources told the FE.
Over two dozen private power plants already sought permission from the government to import their oil, he added.
The privately-owned oil-fired power plants having the total electricity generation capacity of around 2,000 megawatts (MW) are interested in importing furnace oil and diesel on their own.
If allowed, the costs for import of petroleum products will be borne by the state-owned Bangladesh Power Development Board (BPDB), which buys electricity from the plants for supply to the national grid.
The private power plants will have to import over 1.0 million tonnes of furnace oil and around 200,000 tonnes of diesel annually. The BPDB would have to pay for the cost of the fuel and also pay an extra service charge of 9.0 per cent to the plants for importing the petroleum products, sources said.
The payment will have to be made within three months of import.
On the other hand, the service charge to be paid by the BPDB for the fuel oil import would be reviewed every year, the official said.
Allowing fuel import by the private sector would increase the BPDB's electricity purchasing costs from the plants as it would have to pay an additional charge of 9.0 per cent to them, a senior BPC official said.
Currently, the BPDB pays the BPC the fuel import costs but does not pay any service charge.
The private oil-fired power plants' sponsors alleged that the BPC had been supplying substandard fuel to them, which they said had caused mechanical faults.
They claimed that they incurred revenue losses due to the BPC's import of substandard oil.
BPC Chairman Md Eunusur Rahman, however, refuted the claims and said they had been supplying oil to the power plants as per requirement.
He said the state-owned corporation might have to count heavy losses and their storage tanks would remain idle, if the private power plant owners were allowed to import oil independently.
The energy ministry will be required to obtain 'no objection certificates' (NOCs) from the BPC before allowing the private power plants to import petroleum products of their own. Currently, two privately-owned power plants are importing furnace oil to run their plants.
They are the Khulna Power Company Ltd. (KPCL) and the Summit Narayanganj Power Plant. Both are owned by the local Summit Group.
They are importing around 150,000 tonnes of furnace oil every year to run their plants.
The BPC chairman said the private firms were given the NOC to import furnace oil for a limited period.
The clearance to import fuel oil was given to the private-run firms in line with a January 2012 decision of the Cabinet Committee on Economic Affairs to allow private power companies to import petroleum products on their own, he said.
The country launched a drive to increase oil-based power generation in mid-2010 with the natural gas resources depleting fast 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, according to the Power Division.
Of them, 23 have a combined generation capacity of 1,787 MW and run on furnace oil and the remaining 12 having a generation capacity of 393 MW run on diesel.
The BPC has planned to import around 5.6 million tonnes of crude and refined petroleum products to meet the growing demand in different areas including power generation.
It currently incurs a loss of around Tk 10 per litre in the diesel and kerosene trade.