S Alam Group teams up with ERL to build larger oil refinery plant

FE DESK | Published: February 24, 2024 23:37:29

S Alam Group, a leading industrial conglomerate, is going to partner with the state-owned Eastern Refinery (ERL) to build a long-awaited second unit of a petroleum oil refinery project.
Following S Alam Group's proposal last October, the government has approved the construction of the refinery, capable of refining up to 5 million tonnes of petroleum oil. The project will be materialised on an 80-20 equity basis on ERL-owned land in Chattogram, says a statement.
The Ministry of Power, Energy and Mineral Resources has formed a seven-member committee on February 14 to advance the decision-making process.
Headed by Md Khalid Ahmed, BPC's director for operations, the committee comprises three officials from Bangladesh Petroleum Corporation (BPC), three from ERL, and the managing director of Padma Oil.
BPC officials said the committee will get a month to complete the negotiation.
Presently, the Eastern Refinery has an annual refining capacity of 1.5 million tonnes.
About 12 years ago, the government and the BPC took an initiative to build another refinery under 'Installation of ERL-2' project. And the budget was estimated at Tk 130 billion in 2012, when the USD rate was around Tk 80. However, the project faced hurdles and couldn't proceed due to funding issues. Now, the S. Alam Group has stepped in to support the government in completing the project, proposing an expanded capacity of 5 million tonnes instead of the initially planned 3 million tonnes.
Subrata Kumar Bhowmick, Executive Director, S. Alam Group, said, "S. Alam Group estimates that about USD 4.0 billion (over Tk 40,000 crore) of investment will be required to build this oil refinery with capacity of 5 million tonnes. This additional budget is needed because of higher production capacity (the capacity will increase by more than 66 per cent compared to the previous proposal of 2012), inflation and current high dollar rates (Tk 118 per dollar). Besides, the most advanced technology and environment-friendly features will be used for the project."
S. Alam Group aims to bolster Bangladesh's economy by addressing the pressing need for petroleum products.