Furnace oil import bill to soar to $1.3b this year
FHM Humayan Kabir | Sunday, 20 March 2011
FHM Humayan Kabir
The country's furnace oil import bill is set to soar to US$1.3 billion in 2011 due to the commissioning of a good number of expensive oil-based power plants, officials said Saturday. The Bangladesh Petroleum Corporation (BPC) said the government agencies and private sectors have built or in the process of building power plants --- most of which use fire furnace oil to generate electricity. "The Power Development Board (PDB) has told us that these plants alone will need an estimated 1.6 million tonnes while other industrial units will require 0.40 million tonnes of furnace oil this year," BPC Chairman Muqtadir Ali said. BPC officials said the corporation would need more than $1.3 billion for importing two million tonnes of furnace oil in 2011 calendar year. Last week furnace oil traded at $632 per tonne in the international market. The country used to generate most of its power by firing natural gas. But growing gas shortfall and an acute power crisis forced the government to commission furnace-oil based plants to quick-fix the energy crisis. PDB officials said the board has signed contracts with about 20 private firms for setting up dozens of small power plants, which will produce more than 2000-megawatt power. Most of these plants will be run by furnace oil. The PDB and other state-owned power generation firms have also moved to set up 10 more power plants, which will also be fired by furnace oil. BPC officials said over the last six months they have signed deals with eight foreign oil companies to secure import of furnace oil for the coming months. The officials said Emirates National Oil Company, Singapore will supply 0.12 million tonnes, Petco of Malaysia 0.10 million tonnes, and Bumi Siak of Indonesia 80,000 tonnes during January-June period of 2011. The MNOC of the Maldives will sell 60,000 tonnes, Midor of Egypt 40,000 tonnes, Petro China 20,000 tonnes, Petro Limex of Vietnam 60,000 tonnes and ENOC of United Arab Emirates 40,000 tonnes during the same period. The state-owned Eastern Refinary limited (ERL) will supply 0.15 million tonnes of furnace oil to the BPC between January and June this year, they added. The government has waived all taxes and duties on furnace oil import, production and marketing as part of a wide-ranging subsidy package for the power generation plants. Officials said the PDB would also need a direct cash subsidy of Tk. 80 billion from the government to make up for the losses for purchasing power at higher price from private power firms and sell it at lower price to consumers. "Power being generated by furnace-oil based power is very costly. Mainly the cash subsidy will be needed to buy power at a premium price from these furnace-oil based power plants," an official said. The PDB will buy power from the furnace oil based plants at a rate ranging from seven taka to 12 taka per kilowatt hour (kwh) and will sell it at Tk2.64 to 2.78 per kwh to the distribution companies.
The country's furnace oil import bill is set to soar to US$1.3 billion in 2011 due to the commissioning of a good number of expensive oil-based power plants, officials said Saturday. The Bangladesh Petroleum Corporation (BPC) said the government agencies and private sectors have built or in the process of building power plants --- most of which use fire furnace oil to generate electricity. "The Power Development Board (PDB) has told us that these plants alone will need an estimated 1.6 million tonnes while other industrial units will require 0.40 million tonnes of furnace oil this year," BPC Chairman Muqtadir Ali said. BPC officials said the corporation would need more than $1.3 billion for importing two million tonnes of furnace oil in 2011 calendar year. Last week furnace oil traded at $632 per tonne in the international market. The country used to generate most of its power by firing natural gas. But growing gas shortfall and an acute power crisis forced the government to commission furnace-oil based plants to quick-fix the energy crisis. PDB officials said the board has signed contracts with about 20 private firms for setting up dozens of small power plants, which will produce more than 2000-megawatt power. Most of these plants will be run by furnace oil. The PDB and other state-owned power generation firms have also moved to set up 10 more power plants, which will also be fired by furnace oil. BPC officials said over the last six months they have signed deals with eight foreign oil companies to secure import of furnace oil for the coming months. The officials said Emirates National Oil Company, Singapore will supply 0.12 million tonnes, Petco of Malaysia 0.10 million tonnes, and Bumi Siak of Indonesia 80,000 tonnes during January-June period of 2011. The MNOC of the Maldives will sell 60,000 tonnes, Midor of Egypt 40,000 tonnes, Petro China 20,000 tonnes, Petro Limex of Vietnam 60,000 tonnes and ENOC of United Arab Emirates 40,000 tonnes during the same period. The state-owned Eastern Refinary limited (ERL) will supply 0.15 million tonnes of furnace oil to the BPC between January and June this year, they added. The government has waived all taxes and duties on furnace oil import, production and marketing as part of a wide-ranging subsidy package for the power generation plants. Officials said the PDB would also need a direct cash subsidy of Tk. 80 billion from the government to make up for the losses for purchasing power at higher price from private power firms and sell it at lower price to consumers. "Power being generated by furnace-oil based power is very costly. Mainly the cash subsidy will be needed to buy power at a premium price from these furnace-oil based power plants," an official said. The PDB will buy power from the furnace oil based plants at a rate ranging from seven taka to 12 taka per kilowatt hour (kwh) and will sell it at Tk2.64 to 2.78 per kwh to the distribution companies.