Tk 1300cr traded in 5 months

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 last installment of the three-part story.

As a country grows economically, its demand for petroleum products is expected to grow at about 10 per cent per annum.
However, Bangladesh seems to be moving in the opposite direction, with demand for petroleum products having decreased by 8 per cent a year. Chairman of Bangladesh Petroleum Company (BPC), A.S.M. Badruddoza, told The Independent that such an adverse scenario has been created because of illegal business run mainly by private refineries. Officials of BPC and the Energy Ministry informed that for five months from May to September this year, the volume of illegal trade in diesel and petrol in the country was worth Tk. 1,300 crore. During this five-month period the government incurred loss of revenue worth Tk. 300 crore.
According to people concerned, the actual loss in revenue is much greater and the government will be able to get a fix on it if it conducts a thorough survey for the entire year.
Decrease in demand
According to BPC and Energy Ministry sources, BPC has been experiencing a decline in sale of fuel oils after it slashed prices of condensate from Tk. 53 to Tk. 42.60 per litre on March 8 for non-government oil-fractionation plants or small-scale refineries.
BPC also lowered procurement prices of fuel oils from non-government refineries by 30 per cent. As a result, BPC has been purchasing Octane for Tk. 58 per litre (retail price Tk. 99); Petrol for Tk. 56 per litre (retail price Tk. 96); and Diesel for Tk. 55 per litre (retail price Tk. 68). From May 2014 to September 2014, BPC sold 53319 ton Octane, 70664 ton Petrol and 1455462 ton Diesel.
During the corresponding period this year, BPC sold 57629 ton Octane, 58326 ton Petrol and 1316542 ton Diesel.  In five months, decline in sale of Petrol was 12,338 ton worth Tk. 168.54 crore and in case of Diesel, it was 38,920 ton worth Tk. 1120.36 crore. According to BPC, government earns Tk. 15.92 in revenue from the sale of each litre of Diesel. As per these statistics, government has lost Tk. 251 crore in revenue. Of the petroleum products, sale of Petrol saw the worst decline amounting to 26 per cent.

According to government data, sale of petrol was 15,002 ton, Octane 10,739 ton, and Diesel 303,254 ton in June 2014. In June this year, the sale of Octane was 11354 ton, Petrol 11305 ton, and Diesel 284,931 ton. In fiscal 2013-14, sale of Octane was 117452 ton, Diesel 3243554 ton, Petrol 178674 ton, and Kerosene 289871 ton. In the last fiscal, sale of Octane was 126114 ton, Petrol 166823 ton, Diesel 3396061 ton and Kerosene 263029 ton.
A total of 160,639 vehicles received registration from BRTA in 2014 whereas 240,551 vehicles received registration from BRTA till October this year. While the total number of registered vehicles in the country currently stands at 2382,624, the total demand for fuel oil is estimated at over 50 lakh ton per year.
Sub-standard fuel oils at government depots
Owners of several filling stations have alleged that government depots are supplying sub-standard fuel oils to them. On August 12, a team of Eastern Refinery visited Baghabari Depot and found low-quality petrol of Padma, Meghna and Jamuna oil companies stored there.
After testing at Eastern Refinery lab, petrol from Baghabari Depot was found to be of low quality as the 10 per cent recovery rate of oil in all the samples was not up to the standards set by BSTI standard specification. Experts said the oil, if used in vehicles, would lead to troubled ignition. Although Octane of Padma and Meghna oil companies stored in the depot were up to standard specifications, Octane of Jamuna Oil Company lagged behind in quality. RON (Research Octane Number) was 93.8 instead of 95 in Jamuna’s Octane.
Bangladesh Petrol Pump Owners’ Association Co-chairman Nazmul Haque alleged that distribution companies are supplying adulterated fuel oils to government depots and condensates are being mixed with fuel oils there.
However, sources said BPC is procuring sub-standard fuel oils from different private refineries. Their claim has been found true. A BPC probe team has already found evidence that private refineries, including PHP, are not producing Petrol and Diesel as per specifications set by BSTI. Nazmul however denied the accusation that his organisation is buying adulterated and sub-standard fuel oils.
Enemy within
Rupantarita Prakritik Gas Company Limited (RPGCL), a company of Petrobangla, produces Petrol and Diesel from condensates at its Kailashtila fractionation plant.
However, existing anarchy in the Petroleum sector has caused trouble for the plant. It faces unscheduled closures every month as its sale and production do not match. A visit to the plant on November 7 revealed that two of its tanks were full of Petrol and Diesel. Although the plant runs at half the capacity, the fact that sales are lower than production volume results in huge losses and in turn, frequent closures.
RPGCL Director S.M. Emon said that the state-run institution has been facing huge losses because of private refineries. The plant sold Petrol worth Tk. 22 crore and Diesel worth Tk 2.50 crore a day during the last fiscal but currently, the sales volume has taken a hit. Currently, the plant is selling Petrol worth Tk. 11 crore and Diesel worth Tk. 1.50 crore a day. Emon also said that even state-subsidised Padma, Meghna and Jamuna oil companies do not buy fuel oils from RPGCL on a regular basis although the quality of their Petrol and Diesel is better than that of other refineries.
RPGCL officials said they have been frequenting offices of distribution companies to persuade them to buy fuel oils from government refineries. However, their endeavours have failed as marketing agents of private refineries woo officials of distribution companies on a regular basis.
Eastern Refinery, the largest and oldest oil refinery in the country which deals in crude oil, has been passing through a bad phase as well. Eastern produced 65,400 ton Petrol in fiscal 2012-13; 55,900 litre in fiscal 2013-14 and 15,900-ton in fiscal 2014-15. The gradual plunge in production volume has been hurting the institution and the government as well. With private refineries dominating the fuel oil market, the government-run refinery has decided against refining crude oil into petrol and sold oil as low-priced Naphtha which is sold for Tk. 16 per litre.
Breach in condensate policy
On an average, 1,500 ton condensates are extracted from the country’s gas fields per day, which amounts to a total of 45,000 ton condensates per month.
Petrochemical and Refinery Association of Bangladesh (PRAB) Chairman Irsahd Hossain said the government exports 15,000 ton condensates monthly. The government recently took the decision to export condensates to keep production running in the gas sector.
Irsahd said, “The local refineries are not getting enough condensates while government is exporting them. The local refineries are buying condensates at a rate of Tk. 38 per litre while the export rate is fixed at Tk. 14 per litre. Yet, the local refineries are being deprived.”
BPC Chairman Badruddoza said he has received complaints that authorities of gas fields are sending condensates directly to filling stations through tank-lorries, which is completely illegal. The situation is really grave and it must be contained, he said.
Petrobangla Director (Operations) Zamil A. Aleem, however, said that he was yet to receive any such complaints that condensates are being sold directly from gas fields.
He told The Independent that the allocation of condensates to private refineries is vetted by a regulation and the Energy Ministry decides the quantity for refineries concerned. Once condensates are supplied to refineries, BPC is the sole authority to look after usage of condensates, said Zamil.
The government had published a condensate policy on July 10 last year. As per the policy, products produced from locally-sourced or imported condensates cannot be sold without BPC approval. The products must meet standard specifications set by BSTI and Eastern Refinery as well. However, several reports by BPC experts show that these specific regulations are being flouted on a continuous basis.
BSTI Deputy Director Tahir Zamil said all Petroleum products, including Petrol, Diesel and Octane must be tested at BSTI labs after production as per government regulations.
BSTI has not been conducting these tests recently as BPC is running them, he said, adding that they have sent several letters to BPC in this regard.
Energy expert M Tamim said the BPC should check all data relating to the production and supply of all refineries to control the illegal fuel oil business that has been eating into the country’s economy for a long. 

 

 

 

Tk 1300cr traded in 5 months

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 last installment of the three-part story.

As a country grows economically, its demand for petroleum products is expected to grow at about 10 per cent per annum. However, Bangladesh seems to be moving in the opposite direction, with demand for petroleum products having decreased by 8 per cent a year. Chairman of Bangladesh Petroleum Company (BPC), A.S.M. Badruddoza, told The Independent that such an adverse scenario has been created because of illegal business run mainly by private refineries. Officials of BPC and the Energy Ministry informed that for five months from May to September this year, the volume of illegal trade in diesel and petrol in the country was worth Tk. 1,300 crore. During this five-month period the government incurred loss of revenue worth Tk. 300 crore. According to people concerned, the actual loss in revenue is much greater and the government will be able to get a fix on it if it conducts a thorough survey for the entire year. Decrease in demand According to BPC and Energy Ministry sources, BPC has been experiencing a decline in sale of fuel oils after it slashed prices of condensate from Tk. 53 to Tk. 42.60 per litre on March 8 for non-government oil-fractionation plants or small-scale refineries. BPC also lowered procurement prices of fuel oils from non-government refineries by 30 per cent. As a result, BPC has been purchasing Octane for Tk. 58 per litre (retail price Tk. 99); Petrol for Tk. 56 per litre (retail price Tk. 96); and Diesel for Tk. 55 per litre (retail price Tk. 68). From May 2014 to September 2014, BPC sold 53319 ton Octane, 70664 ton Petrol and 1455462 ton Diesel. During the corresponding period this year, BPC sold 57629 ton Octane, 58326 ton Petrol and 1316542 ton Diesel. In five months, decline in sale of Petrol was 12,338 ton worth Tk. 168.54 crore and in case of Diesel, it was 38,920 ton worth Tk. 1120.36 crore. According to BPC, government earns Tk. 15.92 in revenue from the sale of each litre of Diesel. As per these statistics, government has lost Tk. 251 crore in revenue. Of the petroleum products, sale of Petrol saw the worst decline amounting to 26 per cent. According to government data, sale of petrol was 15,002 ton, Octane 10,739 ton, and Diesel 303,254 ton in June 2014. In June this year, the sale of Octane was 11354 ton, Petrol 11305 ton, and Diesel 284,931 ton. In fiscal 2013-14, sale of Octane was 117452 ton, Diesel 3243554 ton, Petrol 178674 ton, and Kerosene 289871 ton. In the last fiscal, sale of Octane was 126114 ton, Petrol 166823 ton, Diesel 3396061 ton and Kerosene 263029 ton. A total of 160,639 vehicles received registration from BRTA in 2014 whereas 240,551 vehicles received registration from BRTA till October this year. While the total number of registered vehicles in the country currently stands at 2382,624, the total demand for fuel oil is estimated at over 50 lakh ton per year. Sub-standard fuel oils at government depots Owners of several filling stations have alleged that government depots are supplying sub-standard fuel oils to them. On August 12, a team of Eastern Refinery visited Baghabari Depot and found low-quality petrol of Padma, Meghna and Jamuna oil companies stored there. After testing at Eastern Refinery lab, petrol from Baghabari Depot was found to be of low quality as the 10 per cent recovery rate of oil in all the samples was not up to the standards set by BSTI standard specification. Experts said the oil, if used in vehicles, would lead to troubled ignition. Although Octane of Padma and Meghna oil companies stored in the depot were up to standard specifications, Octane of Jamuna Oil Company lagged behind in quality. RON (Research Octane Number) was 93.8 instead of 95 in Jamunas Octane. Bangladesh Petrol Pump Owners Association Co-chairman Nazmul Haque alleged that distribution companies are supplying adulterated fuel oils to government depots and condensates are being mixed with fuel oils there. However, sources said BPC is procuring sub-standard fuel oils from different private refineries. Their claim has been found true. A BPC probe team has already found evidence that private refineries, including PHP, are not producing Petrol and Diesel as per specifications set by BSTI. Nazmul however denied the accusation that his organisation is buying adulterated and sub-standard fuel oils. Enemy within Rupantarita Prakritik Gas Company Limited (RPGCL), a company of Petrobangla, produces Petrol and Diesel from condensates at its Kailashtila fractionation plant. However, existing anarchy in the Petroleum sector has caused trouble for the plant. It faces unscheduled closures every month as its sale and production do not match. A visit to the plant on November 7 revealed that two of its tanks were full of Petrol and Diesel. Although the plant runs at half the capacity, the fact that sales are lower than production volume results in huge losses and in turn, frequent closures. RPGCL Director S.M. Emon said that the state-run institution has been facing huge losses because of private refineries. The plant sold Petrol worth Tk. 22 crore and Diesel worth Tk 2.50 crore a day during the last fiscal but currently, the sales volume has taken a hit. Currently, the plant is selling Petrol worth Tk. 11 crore and Diesel worth Tk. 1.50 crore a day. Emon also said that even state-subsidised Padma, Meghna and Jamuna oil companies do not buy fuel oils from RPGCL on a regular basis although the quality of their Petrol and Diesel is better than that of other refineries. RPGCL officials said they have been frequenting offices of distribution companies to persuade them to buy fuel oils from government refineries. However, their endeavours have failed as marketing agents of private refineries woo officials of distribution companies on a regular basis. Eastern Refinery, the largest and oldest oil refinery in the country which deals in crude oil, has been passing through a bad phase as well. Eastern produced 65,400 ton Petrol in fiscal 2012-13; 55,900 litre in fiscal 2013-14 and 15,900-ton in fiscal 2014-15. The gradual plunge in production volume has been hurting the institution and the government as well. With private refineries dominating the fuel oil market, the government-run refinery has decided against refining crude oil into petrol and sold oil as low-priced Naphtha which is sold for Tk. 16 per litre. Breach in condensate policy On an average, 1,500 ton condensates are extracted from the countrys gas fields per day, which amounts to a total of 45,000 ton condensates per month. Petrochemical and Refinery Association of Bangladesh (PRAB) Chairman Irsahd Hossain said the government exports 15,000 ton condensates monthly. The government recently took the decision to export condensates to keep production running in the gas sector. Irsahd said, The local refineries are not getting enough condensates while government is exporting them. The local refineries are buying condensates at a rate of Tk. 38 per litre while the export rate is fixed at Tk. 14 per litre. Yet, the local refineries are being deprived. BPC Chairman Badruddoza said he has received complaints that authorities of gas fields are sending condensates directly to filling stations through tank-lorries, which is completely illegal. The situation is really grave and it must be contained, he said. Petrobangla Director (Operations) Zamil A. Aleem, however, said that he was yet to receive any such complaints that condensates are being sold directly from gas fields. He told The Independent that the allocation of condensates to private refineries is vetted by a regulation and the Energy Ministry decides the quantity for refineries concerned. Once condensates are supplied to refineries, BPC is the sole authority to look after usage of condensates, said Zamil. The government had published a condensate policy on July 10 last year. As per the policy, products produced from locally-sourced or imported condensates cannot be sold without BPC approval. The products must meet standard specifications set by BSTI and Eastern Refinery as well. However, several reports by BPC experts show that these specific regulations are being flouted on a continuous basis. BSTI Deputy Director Tahir Zamil said all Petroleum products, including Petrol, Diesel and Octane must be tested at BSTI labs after production as per government regulations. BSTI has not been conducting these tests recently as BPC is running them, he said, adding that they have sent several letters to BPC in this regard. Energy expert M Tamim said the BPC should check all data relating to the production and supply of all refineries to control the illegal fuel oil business that has been eating into the countrys economy for a long.