The newly introduced tender and negotiation process might help the state-run Bangladesh Petroleum Corporation (BPC) save up to Tk. 1,000 crore annually while importing petroleum products. Ahsanul Jabbar, additional secretary in the energy ministry, told The Independent, “We held a series of meetings with foreign state-owned companies. The premium of oil imports will go down. So, ultimately, the country will save that amount.”
He refused to disclose the figure, however, saying it was a “business secret”. Sources at the BPC, however, told The Independent that the premium, which mostly involves freight charges, has come down 50 per cent compared to the previous year. The premium of refined diesel was USD 4.7–5 per barrel.
Now, this figure is USD 2.37. Similarly, the premium for jet fuel was about USD 7, which is now USD 3.06. “Bangladesh has to import more than 5 million tonnes of oil from the international market at the international price. If we could save 50 per cent of the freight charges (premium), the savings would be more than Tk. 1,000 crore,” said a BPC official.
From October 16 to 24, 2016, a high-powered committee of the Energy Division and the BPC held a series of negotiations with foreign government-run companies—Kuwait Petroleum Corporation (KPC), Petco Trading Labuan Company Limited (PTLCL) of Petronas, Emirates National Oil Company (ENOC), Petroleumax, Brunei Shell Petroleum Co Sdn Bhd (BSP), Philippine National Oil Company (PNOC), PTT (Petroleum Authority of Thailand), China ZhenHua Oil Co. Ltd and China International United Petroleum and Chemicals Co. Ltd. (UNIPEC)—to reduce the premium. All the companies agreed.
“During the negotiations, many companies offered us lower premium—almost half that of the previous years. Ultimately, all the interested parties agreed to offer cheaper prices to Bangladesh,” said a member of the negotiations committee.
After the parleys, BPC opened a tender on October 31 to import 380,000 MT of jet fuel, 500 000MT of furnace oil, and 3.8 million tonnes of diesel, which were also offered at USD 2.37–2.50. The participants are: UNIPEC, ENOC, Glanco, Trafigura, SK Refinery, BITOL, and six other firms. The government official said that some companies were at the talks table to demand the privilege to export oil without any tender. Later, they participated in the tender. Last year, the government decided to import fuel oil through tenders after different quarters and experts questioned its 15-year-old practice of importing it through government-to-government contracts. It was decided that 50 per cent would be imported through tenders and 50 per cent through government-to-government practices that allow a direct import policy. The government got the benefit of low oil prices on the international market as BPC made a profit of Tk. 10,500 crore in the last fiscal year.