Project finance hitch hits ERL\'s 2nd unit

Installation of the second unit of Eastern Refinery Limited (ERL), a subsidiary of the state-owned Bangladesh Petroleum Corporation (BPC), now has been hit by a project finance hitch.
A senior official said implementation of ERL unit-2 project, taken at a cost of over Tk 167 billion (16700 crore), is going on at a snail's pace in the absence of any foreign assistance for it.
"But we are negotiating with different quarters to help implement the project."
He also said the unit would be set up with bank loan, if the move to obtain foreign funds fails.
The new ERL unit was scheduled to be completed by June 2016 to refine 4.5 million tonnes of petroleum annually.
At present, the country's only refiner refines 1.3 million tonnes of crude oil every year against its capacity of 1.5 million tonnes.
The BPC annually imports nearly 5.0 million tonnes of crude and refined oil.
Currently, 25 per cent of the demand is met by the fuel refined by the ERL and 75 per cent is imported.
The state-owned BPC would need to import nearly 1.0 million tonnes of petroleum fuels as its dependence on imports will decline on construction of the ERL unit-2.
Of the total Tk 167.31 billion project cost, Tk 50 billion will be provided by the BPC and the remaining Tk 117.31 billion is expected as project assistance, according to available Planning Commission data.
The ERL Unit 2 project comes as part of BPC's plan to boost production of the country's petroleum products to help meet the growing local demand.
Technip, a French company, was given the task of designing the second unit, as it earlier installed the ERL's first unit.
The company would begin its work soon, Md. Akterul Haque, project director of ERL Unit-2, told the FE.
Main construction work under the project would start within 9-12 months on completion of the design, he said.
He also said if the project does not get any project assistance, the authority concerned may implement it with bank loan.
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