Govt to allow private companies to set up oil refineries

http://www.newagebd.com/2010/nov/11/busi.html#3

Govt to allow private companies to set up oil refineries
Staff Correspondent

The energy ministry on Wednesday decided that private companies would be allowed to set up oil refineries ignoring the opposition of the state-run Eastern Refinery Ltd.

The ministry officials at an inter ministerial meeting, chaired by prime minister’s adviser Tawfiq-e-Elahi Chowdhury, presented a draft policy guideline for allowing private companies to set up refineries.

Tawfiq, however, asked the officials to shorten the policy keeping consistencies with the existing petroleum and environment acts.

The adviser said that the private companies would be allowed to set up refineries but the government would not give any guarantee of purchasing fuel oils from them and the refineries would have to be export-oriented.

Energy officials, however, said that the refiners would have to sell fuel oils to government once the government asked for.

But the ERL officials opposed the government move as they believed that their plant alone can meet the local demand if its capacity is enhanced through BMRE (balancing, modernisation, rehabilitation and expansion) programme.

At present, the country has only a state-owned refinery – Eastern Refinery Limited – with annual production capacity of 1.5 million tonnes.

The state-owned Bangladesh Petroleum Corporation imports crude oil and then it refines the fuel oils through its subsidiary ERL for local use.

The government imports refined petroleum to meet the rest of the total demand of 38 million tonnes of fuel oil in the country a year.

ERL officials felt that the government would ultimately ditch a plan for BMRE of the refinery to purchase oils from the influential private companies.

Finding huge potential in refinery business, a number of local and international companies offered the government to set up plants in the country.

Official sources said the government so far received six proposals from local and international investors to set up private refinery, adds United News of Bangladesh.

Local Basundhara Group and Mobil Jamuna Fuels Limited, and a Czech and a Saudi oil firm are among the interested parties who submitted proposals to set up private refinery in the country.

Of them, Basundhara Group offered to invest $700 million while MJFL proposed to invest $ 110 million for a plant.

The Czech state-owned export bank offered to invest $ 2.5 billion in the refinery business.

The local Beximco Group also submitted a proposal to the government seeking permission for refinery business, said a source.