ERL expansion plan in limbo
Saturday, 7 January 2012
Nizam Ahmed
The authorities concerned should immediately go for quick expansion of the country's lone oil refinery in order to help rein in the swelling petroleum import bill, officials and experts said on Friday.
The relevant authorities have been delaying an approval for expansion of the state-owned Eastern Refinery Limited (ERL), a sister concern of the Bangladesh Petroleum Corporation (BPC), the lone importer and distributor of petroleum products and crude, experts said.
According to them, the reasons for this delay, however, have remained unexplained.
A German consortium which showed interest to undertake a Tk 67 billion deal to upgrade the ERL located near the country's main Chittagong port, under a Private Public Partnership (PPP) project last year, was yet to get an approval of its proposal.
"Meanwhile, the estimated cost of the project taken for balancing, modernisation, rehabilitation and expansion (BMRE) of the refinery to help augment its production and lower the country's aggregate import bill for petroleum products, has gone up," Mohammad Rezaul Alam, managing director of the ERL told the FE.
Upon completion of the proposed BMRE works, the production capacity of the ERL is projected to reach 4.5 million tonnes per annum from existing 1.5 million tonnes.
An expanded ERL can help the country to meet two-thirds of its annual demand for some 6.5 million tonnes by refining imported crude oil. The refining will directly reduce the oil cost by $20 a barrel or $160 a tonne, according to experts.
Experts said the estimated BMRE project cost of the ERL had, meanwhile, crossed Tk 100 billion level and any firm, which would like to accept the deal, would demand a thorough reassessment of the entire project.
"The project is now likely to get its final approval from the ministry in a couple of weeks," Rezaul Alam said.
The officials of the ministry of power, energy and mineral resources said in last November that the authorities concerned were then at the final stage to approve the deal in favour of the German IEL Consortium, which had submitted its request in the form of a proposal for the project last July.
But a source close to the relevant authorities said there is yet no firm hope about its early approval because a strong group is still creating an obstruction so that the ministry does not give the approval to such an important project.
"This group thinks if the project to expand ERL is approved, they will lose their business gains which do come to them in the form of commission earnings in the process of importing a large volume of refined petroleum products from abroad," an observer alleged.
Others claim that some form of trickery is being resorted to, by the vested quarters, taking the energy sector and the consumers as the hostage of the situation.
The observers have expressed their astonishment as why such priority projects, in different important sectors, are not given a proper attention.
Traders said as the approval has been delayed leading to escalation of the project cost, the concerned authorities now have no alternative but to re-float the tender or issue a fresh tender. This will further delay the vital BMRE project for the ERL.
"This is such an important project that it should have received a befitting priority attention from the authorities concerned in order to help petroleum import cost which will keep on going up as the country is now heavily dependent on oil-fired plants for supply of power in the country," another government official said requesting not to be identified.
"We, all including, leaders, officials and workers love to talk but technically we tend to avoid responsibilities and discharge properly our duties. This is why our priority projects do not see the light of implementation," another official at the Prime Minister's office told the FE.
Meanwhile, the country's overall import payments grew by nearly 23 per cent in the first five months of the current fiscal year (FY) to June 2012, mainly because of a high rise of import bills on account of fuel oil, the Bangladesh Bank said late this week.
The country's fuel import bill surged by over 101 per cent on a year-on-year basis to $1.195 billion in the first quarter of the current fiscal, as more oil-fired power plants went into operation.
The authorities concerned should immediately go for quick expansion of the country's lone oil refinery in order to help rein in the swelling petroleum import bill, officials and experts said on Friday.
The relevant authorities have been delaying an approval for expansion of the state-owned Eastern Refinery Limited (ERL), a sister concern of the Bangladesh Petroleum Corporation (BPC), the lone importer and distributor of petroleum products and crude, experts said.
According to them, the reasons for this delay, however, have remained unexplained.
A German consortium which showed interest to undertake a Tk 67 billion deal to upgrade the ERL located near the country's main Chittagong port, under a Private Public Partnership (PPP) project last year, was yet to get an approval of its proposal.
"Meanwhile, the estimated cost of the project taken for balancing, modernisation, rehabilitation and expansion (BMRE) of the refinery to help augment its production and lower the country's aggregate import bill for petroleum products, has gone up," Mohammad Rezaul Alam, managing director of the ERL told the FE.
Upon completion of the proposed BMRE works, the production capacity of the ERL is projected to reach 4.5 million tonnes per annum from existing 1.5 million tonnes.
An expanded ERL can help the country to meet two-thirds of its annual demand for some 6.5 million tonnes by refining imported crude oil. The refining will directly reduce the oil cost by $20 a barrel or $160 a tonne, according to experts.
Experts said the estimated BMRE project cost of the ERL had, meanwhile, crossed Tk 100 billion level and any firm, which would like to accept the deal, would demand a thorough reassessment of the entire project.
"The project is now likely to get its final approval from the ministry in a couple of weeks," Rezaul Alam said.
The officials of the ministry of power, energy and mineral resources said in last November that the authorities concerned were then at the final stage to approve the deal in favour of the German IEL Consortium, which had submitted its request in the form of a proposal for the project last July.
But a source close to the relevant authorities said there is yet no firm hope about its early approval because a strong group is still creating an obstruction so that the ministry does not give the approval to such an important project.
"This group thinks if the project to expand ERL is approved, they will lose their business gains which do come to them in the form of commission earnings in the process of importing a large volume of refined petroleum products from abroad," an observer alleged.
Others claim that some form of trickery is being resorted to, by the vested quarters, taking the energy sector and the consumers as the hostage of the situation.
The observers have expressed their astonishment as why such priority projects, in different important sectors, are not given a proper attention.
Traders said as the approval has been delayed leading to escalation of the project cost, the concerned authorities now have no alternative but to re-float the tender or issue a fresh tender. This will further delay the vital BMRE project for the ERL.
"This is such an important project that it should have received a befitting priority attention from the authorities concerned in order to help petroleum import cost which will keep on going up as the country is now heavily dependent on oil-fired plants for supply of power in the country," another government official said requesting not to be identified.
"We, all including, leaders, officials and workers love to talk but technically we tend to avoid responsibilities and discharge properly our duties. This is why our priority projects do not see the light of implementation," another official at the Prime Minister's office told the FE.
Meanwhile, the country's overall import payments grew by nearly 23 per cent in the first five months of the current fiscal year (FY) to June 2012, mainly because of a high rise of import bills on account of fuel oil, the Bangladesh Bank said late this week.
The country's fuel import bill surged by over 101 per cent on a year-on-year basis to $1.195 billion in the first quarter of the current fiscal, as more oil-fired power plants went into operation.