India has backed out of its plan to export diesel to Bangladesh through the river route, saying its infrastructure at Shilghat River Port from where cargoes were set for loading got damaged in recent flooding, said officials.
Indian state-run Bharat Petroleum Corporation Ltd (BPCL), in a letter sent to state-run Bangladesh Petroleum Corporation (BPC), has conveyed the decision recently, a senior BPC official told the FE Thursday.
The decision, however, came following a disagreement between BPC and BPCL over settling risk issues for transport of diesel from India's Shilghat to Bangladesh's Baghabari.
The official said India had wanted Bangladesh to take delivery of diesel from inside India at Shilghat and shoulder the responsibility of carrying the petroleum product to Bangladesh territory at Baghabari River Port.
India's demand had contradicted the existing international norms of petroleum trading, he added.
If agreed, Bangladesh had to bear additional expense of insurance to cover any risk during diesel transport through the river.
Bangladesh also had to shoulder the evaporation and transport loss of diesel while carrying it from India.
BPC had protested the Indian stance and requested them to follow international norms to fix the 'risk and title' to facilitate diesel import, said the BPC official.
The 'risk and title' is part of terms and conditions set for international trade of oil products, he added.
Under the existing international norms, the petroleum exporting countries load oil products from their respective countries' ports and the importing countries receive it inside their countries' ports.
BPC and BPCL agreed earlier over Bangladesh's import of gasoil diesel from neighbouring India through the River Brahmaputra by small barges until completion of the construction work of a proposed pipeline, the first-ever cross-country pipeline to carry petroleum products.
BPC intended to import diesel from India's Numaligarh refinery owned by BPCL.
It was eyeing to import around 2,000 tonnes of diesel per month until setting up of the proposed 130-kilometre oil supply Indo-Bangla pipeline.
Bangladesh earlier imported 3,500 tonnes of diesel from BPCL for a brief period in 2007.
BPC also imported around 400,000 tonnes of gasoil from the Indian Oil Company Ltd during 2005-06, BPC officials said.
BPC and BPCL were, however, working to install jointly the first-ever onshore pipeline between the two neighbouring countries in South Asia to carry petroleum products from Numaligarh refinery to Bangladesh, said the official.
They are now collecting soils of the planned pipeline routes for test before starting construction of the pipeline.
BPC and the BPCL have already agreed to establish a joint venture (JV) firm to build the fuel supply pipeline.
The two companies earlier inked a memorandum of understanding (MoU) to establish the JV firm to install the cross-country oil supply pipeline.
The planned JV firm will be responsible for setting up the pipeline and carrying out its operation and maintenance, he said.
Bangladesh currently imports around 3.5 million tonnes of diesel to meet local demand.
mazizur.rahman@outlook.com
