Private refiners, the main culprits
A gang of private sector oil refineries are amassing crores of taka every day through selling substandard fuel oil in the black market in a nexus with some filling stations and officials of the government agencies concerned. The Independent investigation has unfolded involvement of top-shots in businesses and bureaucracy in this cartel. Following is the second installment of the three-part story.
SHAHED SIDDIQUE
The scale of corruption taking place in condensate sector can easily be understood from the fact that the energy ministry has allocated condensate to two refineries which do not have any production plants at all. The Independent investigation has found that 30,000 metric tonnes of condensate was allocated to Carbon Holdings Ltd and 20,000 MT to Trans Bangla Commodity Ltd though none of these two set up any plant to refine the condensate.
Most of the countrys 14 private refineries that are producing petroleum products using condensate derived from gas fields, have been illegally selling fuel oil to filling stations. It may be mentioned that three of these plants are yet to sell fuel oil to the state-owned Bangladesh Petroleum Corporation (BPC) as they are yet to sign any buy-sell agreement with the BPC.
Nasrul Hamid Bipu, state minister for energy and mineral resources, told The Independent that they have found evidence of the illegal practice by some fractionation plants and announced that their licences would be cancelled.
The Independent found that Golden Condensed Oil Refinery Factory Ltd, Universal Refinery Ltd, and Rupsa Refinery have been buying condensates from Petrobangla for months now. Rupsa bought 638 tonnes of condensates in September and 1,597 tonnes in October; Golden bought 1,667 tonnes in September and 2,005 tonnes in October;
and Universal bought 331 tonnes condensate in August from Petrobangla.
Shahjahan Saju, a director of Universal Refinery, did not make any comment.
Officials of these three fractionations, on condition of anonymity, disclosed that these condensates were collected on a test basis and that none of the companies have any deal with the BPC to sell fuel oils to the regulator.
On being asked why these companies collected condensates from Petrobangla for months if they are not going to produce fuel oils commercially, Bipu told The Independent that a refinery must import condensates if it wants to use the gas-field by-products for test production.
The Independent also obtained an alarming finding. Most of the refineries do not maintain any proper log-sheet for the petroleum products they extract from condensates. There is not even any record showing the amount of fuel oils that they have extracted from condensates.
In September, Petromax Refinery bought 8,350 tonnes condensate, but supplied a total of 7,601 tonnes of diesel, petrol and octane to Padma, Meghna and Jamuna oil companies. In the same month, Super Refinery bought 4,825 tonnes of condensate, but supplied only 617 tonnes of petrol to the BPC; PHP supplied 283 tonne fuel oils against 1,141 tonnes of condensate; Chowdhury Refinery supplied only 76 tonnes of oil against 824 tonnes of condensate; Lurk 63 tonnes of petrol against 1,188 tonnes of condensate; CVO Petrochemical 50 tonnes of petrol against 712 tonnes of condensate; Synthetic Refinery 63 tonnes to Jamuna Oil against 887 tonnes of condensate; and Aqua Refinery supplied only 834 tonnes of fuel oils against 3,971 tonnes of condensate.
Similar figures were revealed when this correspondent analysed the data of some months preceding September and followed the trail.
Bangladesh University of Engineering and Technology (BUET) professor M Tamim said 5 to 10 per cent process loss is possible while producing petroleum products from condensates. Some other products, other than fuel oils, such as mineral turpentine and Special Boiling Point Solvent (SBPS), can also be produced in the production process, he added.
Acknowledging irregularities by some refineries, Petrochemical and Refiners Association of Bangladesh president Irshad Hossain told The Independent that some of our members are selling solvent to petrol pumps directly.
Private refineries in Bangladesh are a growing industry. There are some irregularities in this sector, and we seek help from all concerned to overcome the problems and bring the refineries in a proper structure, he added.
Besides, some existing refineries such as Kailashtilla fractionation plant allow only 2-3 per cent process loss, officials concerned said.
However, The Independent has evidence that the volume of fuel oil supplied by Super, CVO, Aqua, PHP and other refineries is not more than 30 percent of the condensate they had received from BPC.
According to BPC officials, the majority of the volume of fuel oils, produced from condensates, goes to filling stations, even though this is a clear violation of the Petroleum Act of 1976 and Clause 30 of the regulations fixed for establishing petrol pumps in the country.
According to the law and the petrol pump policy, the refineries cannot sell petroleum products, such as petrol, octane or diesel, to any entity other than the BPC.
Businesspersons involved in the trade, however, held the government liable for the illegal operations by the filling stations and refineries. There is a huge gap between the prices of fuel oils sold in the retail market and the prices the government has fixed for its purchase from the refineries.
The BPC purchases octane for Tk. 58/litre (retail price Tk. 99), petrol for Tk. 56/litre (retail price Tk. 96), and diesel for Tk. 55/litre (retail price Tk. 68).
As the trade in the retail market offers much more lucrative returns than the prices offered by the government, the refineries opt for the filling stations rather than the BPC and make a killing, the businesspersons added.
CAUGHT RED-HANDED
A BPC team, led by its director (operations), inspected Aqua Turpentine and Solvent Plant refinery in Tongi BISIC Industrial Area on September 1. According to the members of the team and its reports, they found direct proof of irregularities by refineries during that visit.
A test at Aqua plant on May 10, 2011, had showed that of its total production, the plant generated 73.37 per cent petrol, 22.20 per cent high-speed diesel, 2.42 per cent SBPS, and 2.01 per cent solvent from condensates. However, the visiting BPC team found that the plant later changed its pattern of production from condensates, which is illegal. Aqua now says it currently produces 20 to 30 per cent petrol, 10 to 15 per cent diesel, 30 per cent mineral turpentine and 35 per cent high and low grade solvent from condensates. One of the BPC team members told The Independent that the Aqua authorities failed to produce a log-sheet showing the exact amount of condensates that they procured from the BPC, and the volume of production and sales of petroleum products extracted from those condensates.
The same BPC team also visited PHP Petrorefinery Ltd on September 13 and detected massive irregularities there. After the visit, the team said in its report that the PHP authorities mysteriously produced solvent and KSO (kerosene oil) on a larger scale. Although the PHP authorities also tried to produce kerosene, the BSTI did not issue a quality certificate for the output, as it was sub-standard. The report clearly stated that PHP sold its KSO output directly to filling stations as diesel, which is completely illegal. Even the solvents were sold to filling stations, the report pointed out.
But BPC officials told The Independent that there is no fuel item in the name of KSO. Its a product made by some refineries here in Bangladesh.
The BPC team also found astounding information while visiting Lurk Petroleum Company the same day.
The BPC or the relevant authorities did not issue any specific instruction to Lurk regarding the amount of petroleum products or solvent they should produce from condensates. Taking advantage of the absence of specific instructions, Lurk informed the BPC team that they were producing the minimum amount of petrol and diesel from condensates, while the rest of the condensates was being used for producing solvents for the paint industry.
However, Lurk allegedly smuggles petroleum products under the cover of the paint sector.
Despite such widespread allegations, no punitive action has been taken against any of the refineries, allegedly because a senior official of BPCs Marketing Department, who has been serving the organisation in the same capacity for 22 years, has taken a shady stance. It is alleged that the BPC has failed to introduce guidelines of the yield pattern for the private refineries due to the intervention of the said official.
STRONG SYNDICATE
The Independent found that on several occasions, police have detained people while transporting fuel oils illegally on tank-lorries from private refineries. However, such arrests have boomeranged on the police, as they have found themselves in hot water following several such arrests.
Recently, the officer-in-charge of Bayezid Police Station in Chittagong was suspended for seizing a lorry carrying fuel oil from Super refinery. On November 10, police seized lorries carrying fuel oil illegally at Morolganj in Bagerhat and Narail Sadar. The police found proof that the lorry seized in Narail loaded fuel oils from a refinery in Chittagong. Although no action in this regard has been taken yet, the officer-in-charge of Narail Sadar Police Station has been transferred.
Rumours have it that the nexus involved in smuggled fuel oils has strong connections and liaisons at every level of the administration to keep its business running. Analysing the sway of some private refineries and their illegal interference in the petroleum sector, the officials concerned have recommended a strict supervision over the use of condensates and their output, including solvents. They pointed out that such supervision is needed to ensure the countrys energy security and warned that such long-standing negligence may result in chaos in the countrys energy management in the future.
