The Condensate Cartel

Adulterated oil floods filling stations

Sale of adulterated fuel oil in filling stations across the country has become rampant, posing a massive threat to automobile engines, and causing huge revenue loss for the government. An investigation carried out by The Independent reveals that a good number of filling stations in nexus with some private sector refineries are illegally selling substandard fuel oil. In the last five months till September this year, according to BPC and energy ministry officials, the volume of illegal trade of diesel and petrol stands at Tk 1,300 crore, and the government lost Tk 300 crore as revenue during this period.As per law, the state-owned Bangladesh Petroleum Corporation (BPC) has the mandate to sell oil to filling stations. The BPC, a statutory body of the government under the Ministry of Energy & Mineral Resources, is the sole authority to collect and import crude petroleum and other refined petroleum products. In response to allegations of widespread irregularities, the regulatory body recently sent notices to 150 filling stations. State Minister for Power, Energy and Mineral Resources Nasrul Hamid Bipu told The Independent that a nexus of some private refineries and filling station owners is liable for the sale of adulterated fuel oil, and that the government is going to deal with the matter with an iron fist. According to government statistics, the total demand of fuel oil has decreased by 8 per cent because of the sale of adulterated octane, diesel and petrol, said BPC Chairman ASM Badruddoza. All types of vehicles currently plying the streets also face technical problems because of this menace. Apart from affecting vehicles, adulterated fuel oil is also instrumental in causing serious environment pollution.

ILLEGAL ACTIVITIES AT FILLING STATIONS:
The Independent investigation on more than 200 filling stations has exposed alarming statistics. Documents show Sarder Filling Station at Taraganj in Jessore did not buy a single litre of fuel oil from Meghna Petroleum Limited, a subsidiary of the BPC, for six months until August this year. Yet, this filling station has managed to sell 2,507-litre octane, 8,822-litre petrol, and 29,994-litre diesel in June alone. The August sale of this filling station was 2,482-litre octane, 7,616-litre petrol and 35,212-litre diesel. If the government statistics is taken into consideration, then the filling station authorities must have bought fuel oil from black market to keep their business up and running.
Sarder Filling Station legally bought 1,600-litre octane, 55,400-litre petrol, and 320,000-litre diesel from the government between January 2014 and August this year. However, its sales volume was much higher as it sold 42,551-litre octane, 206,278-litre petrol and 886,588-litre diesel to retail customers during this period. Same goes for Unique Filling Station at Babuganj in Barisal as the station authorities sold 8,421-litre octane, 9,976-litre petrol and 60,059-litre diesel in July this year without buying a single litre of fuel oil from the BPC.
M/S Karim Filling Station at Bakchar of Jessore bought only 6,000-litre diesel from Jamuna Oil Company Limited, another subsidiary of the BPC, in August this year. However, the log sheet of this filling station shows that it sold 29,816-litre diesel, 3,595-litre petrol and 1,716-litre octane in that month alone.  It was also found in the investigation that the filling station sold a large consignment of fuel oil without procuring a single drop of oil from the government in April.
The same story of anomalies came forth while analysing records of Balaka Traders, Haque Filling Station, and Nahar Filling Station in Naogaon, Tusar Filling Station in Joydevpur, Nahar Filling Station in Rangpur, Gaibandha’s M/S Sarker Enterprise, M/S SS Filling Station in Kurigram, Mansoor Filling Station of Pabna, and several other filling stations elsewhere.
As per The Independent investigation, Sheikh Osman Ali Filling Station in Bagerhat sold 74,555-litre octane, 42,883-litre petrol, and 1,79,8803-litre diesel  between January 2014 and August this year. During this period, Simanta Petroleum Service of Chuadanga sold 28,326-litre octane, 129,069-litre petrol, and 127,900-litre diesel—all procured from the black market.
WHAT’S THE SOURCE OF THIS BLACK MARKET OIL?
In a sudden move on March 8, the government slashed the prices of condensate (condensate is a low-density mixture of hydrocarbon liquids) to Tk 42.60 from Tk 53 for private oil fractionation plant or small-scale refineries. The BPC also lowered the procurement price of fuel oil from non-govt refineries by 30 per cent. As a result, the BPC purchases octane for Tk 58/litre as against the retail price of Tk 99, petrol for Tk 56/litre (retail price Tk 96), and diesel for Tk 55/litre (retail price Tk 68).
This huge difference between the retail price and the wholesale rate have allegedly armed the 12 private oil refineries to take unethical chances, and cashing in on the scope, they have discreetly been supplying sub-standard fuel oil to filling stations illegally.
ILLEGAL MEANS OF SMUGGLING FUEL OILS:
It is alleged that private refineries sell fuel oil directly
to filling stations by tank-lorries although such sales are prohibited by law. Only government approved Padma, Meghna and Jamuna oil companies can sell fuel oil to filling stations.
While selling oil, the private refineries use fake documents, and they even create fictitious filling stations and fake documents to run their shady business.
On October 1, police seized a tank-lorry at Morrelganj in Bagerhat. The Independent found that M/S Sahana Traders, an authorised packed point dealer (dealers who are permitted to sell fuel oil from drums), located at Jatrabari in the capital, had sent the lorry to Morrelganj for collecting oil. The lorry was carrying 13,500-litre fuel oil.
However, this dealer did not collect a single litre of fuel oil from Godnail oil depot from July to September. If this was not all, the Sahana Traders authorities sent the lorry using the name of another packed point dealer Bismillah Traders, a fictitious trading entity. The BPC has clearly stated that they don’t have any registered dealer by the name of Bismillah Traders. The BPC has summed up that the lorry contained smuggled or stolen fuel oil and it was using fake documents. As a punishment, the BPC later cancelled the permit of Sahana Traders.
WARNINGS ARE OF LITTLE AVAIL:
There is no statistics on how many filling stations are involved in the sale of fuel oil through illegal means.
Bangladesh Petrol Pump Owners’ Association’s co-chairman Md Nazmul Haque told The Independent that finding octane of 95 RON (Research Octane Number), which is globally recognised as safe fuel for auto-mobiles, has become impossible because of adulteration. After probing allegations of adulteration by numerous probe bodies, the BPC has sent notices to 150 filling stations, and deputy commissioners in 64 districts for taking necessary actions, but of no avail. The government move has paved way for the BPC and oil distribution companies to realize extortion worth Tk 5-6 lakh from filling station owners cashing in on the notices.  
The number of filling stations is going up as the economy of the country is growing. About 100 new filling stations have been set up in the country over the past one year. In 2014, the number of filling stations was 1,802, which currently stands at 1,894. The number of packed point dealers also increased by this period and it now stands at 3,605. It is alleged that the authorities concerned are flouting rules while approving licenses for filling stations. Although rules state that there can be no filling stations within the radius of 2-killometre of another station in urban and 4-killometre in rural areas, those rules are being flouted often.
HARMFUL EFFECT OF ADULTERATED FUEL OILS ON AUTOMOBILES:
Hasan Ferdous, a Toyota SUV owner, bought 80-litre octane from Khaleq Filling Station at Mirpur in the capital three months back. He left Dhaka for Khulna, but his car lost ignition at Savar. Later, he had to change the fuel oil from his vehicle’s oil tank and refuel it to get the SUV going.
Hasan told this correspondent that he had the octane bought from Mirpur tested out of curiosity. The results show that the octane was supposed to be of 95 RON grade but it actually was of 88 RON grade. This correspondent spoke to two truck drivers -- Hamid and Suja -- at Karwanbazar Truck Stand in the capital. They both said that they have recently been facing trouble while driving their vehicles as the quality of diesel went down drastically. The drivers said that the sub-standard fuel oil was harming their vehicles’ engines.
Owner of a workshop at Mohakhali in the capital, preferring anonymity, said majority of the vehicles he repairs come with engine problems nowadays and that the number has registered a significant rise in the recent time.
 

LACKLUSTER IMPLEMENTATION OF REGULATORY INITIATIVES:

BPC Chairman Badruddoza chaired a meeting on adulteration of fuel oil on October 14 this year. In that meeting, the Jamuna Oil Company Limited’s managing director said monitoring in this regard is not effective.  
Adulteration has played havoc with the fuel oil sector. He also said that responsible filling station owners and private fractionations must be subjected to stern action. The meeting decided to serve notices to 150 filling stations and their licenses will be annulled as per clause 30 of the regulation for setting up filling stations. However, the authorities are yet to cancel the licenses of any of the errant filling stations.
An expert committee strongly recommended that movement of oil tankers through the Bangabandhu Multipurpose Bridge and Lalon Shah Bridge should be stopped as oil is usually transported to Khulna and the northern region from Chittagong on waterways. However, the authorities are yet to implement the decision prescribed by the
experts.
Another decision was that the BPC-subsidised Padma, Jamuna and Meghna would randomly test fuel oil sold by 10 filling stations apiece and if any adulteration is found then stern actions would be taken against the fuel stations. Yet, for some unknown reasons, this decision was not implemented as well.
According to BPC, Sajjadul Islam Kabul, president of Bangladesh Jalani Paribeshak Samity and also the owner of 15 filling stations in Khulna and Jessore regions, is one of the prime accused of fuel adulteration.
He partially admitted the allegations against him and said that there are some irregularities at his filling stations. He told The Independent that he has licenses for buying oil from three state-run companies.
He also tried to defend himself, saying that sometimes it happens that he collects oil for one of his 15 filling stations and sell it in another of those stations to meet emergency requirement of the latter.
“Hence, you cannot say that the second station collected the oil from black market,” he said.
Energy expert M Tamim told The Independent that such state of the energy sector is alarming for the country and this could lead to the collapse of the sector as well as the economy as a whole.

 

 

 

 

 

 

The Condensate Cartel

Adulterated oil floods filling stations

Sale of adulterated fuel oil in filling stations across the country has become rampant, posing a massive threat to automobile engines, and causing huge revenue loss for the government. An investigation carried out by The Independent reveals that a good number of filling stations in nexus with some private sector refineries are illegally selling substandard fuel oil. In the last five months till September this year, according to BPC and energy ministry officials, the volume of illegal trade of diesel and petrol stands at Tk 1,300 crore, and the government lost Tk 300 crore as revenue during this period.As per law, the state-owned Bangladesh Petroleum Corporation (BPC) has the mandate to sell oil to filling stations. The BPC, a statutory body of the government under the Ministry of Energy Mineral Resources, is the sole authority to collect and import crude petroleum and other refined petroleum products. In response to allegations of widespread irregularities, the regulatory body recently sent notices to 150 filling stations. State Minister for Power, Energy and Mineral Resources Nasrul Hamid Bipu told The Independent that a nexus of some private refineries and filling station owners is liable for the sale of adulterated fuel oil, and that the government is going to deal with the matter with an iron fist. According to government statistics, the total demand of fuel oil has decreased by 8 per cent because of the sale of adulterated octane, diesel and petrol, said BPC Chairman ASM Badruddoza. All types of vehicles currently plying the streets also face technical problems because of this menace. Apart from affecting vehicles, adulterated fuel oil is also instrumental in causing serious environment pollution. ILLEGAL ACTIVITIES AT FILLING STATIONS: The Independent investigation on more than 200 filling stations has exposed alarming statistics. Documents show Sarder Filling Station at Taraganj in Jessore did not buy a single litre of fuel oil from Meghna Petroleum Limited, a subsidiary of the BPC, for six months until August this year. Yet, this filling station has managed to sell 2,507-litre octane, 8,822-litre petrol, and 29,994-litre diesel in June alone. The August sale of this filling station was 2,482-litre octane, 7,616-litre petrol and 35,212-litre diesel. If the government statistics is taken into consideration, then the filling station authorities must have bought fuel oil from black market to keep their business up and running. Sarder Filling Station legally bought 1,600-litre octane, 55,400-litre petrol, and 320,000-litre diesel from the government between January 2014 and August this year. However, its sales volume was much higher as it sold 42,551-litre octane, 206,278-litre petrol and 886,588-litre diesel to retail customers during this period. Same goes for Unique Filling Station at Babuganj in Barisal as the station authorities sold 8,421-litre octane, 9,976-litre petrol and 60,059-litre diesel in July this year without buying a single litre of fuel oil from the BPC. M/S Karim Filling Station at Bakchar of Jessore bought only 6,000-litre diesel from Jamuna Oil Company Limited, another subsidiary of the BPC, in August this year. However, the log sheet of this filling station shows that it sold 29,816-litre diesel, 3,595-litre petrol and 1,716-litre octane in that month alone. It was also found in the investigation that the filling station sold a large consignment of fuel oil without procuring a single drop of oil from the government in April. The same story of anomalies came forth while analysing records of Balaka Traders, Haque Filling Station, and Nahar Filling Station in Naogaon, Tusar Filling Station in Joydevpur, Nahar Filling Station in Rangpur, Gaibandhas M/S Sarker Enterprise, M/S SS Filling Station in Kurigram, Mansoor Filling Station of Pabna, and several other filling stations elsewhere. As per The Independent investigation, Sheikh Osman Ali Filling Station in Bagerhat sold 74,555-litre octane, 42,883-litre petrol, and 1,79,8803-litre diesel between January 2014 and August this year. During this period, Simanta Petroleum Service of Chuadanga sold 28,326-litre octane, 129,069-litre petrol, and 127,900-litre dieselall procured from the black market. WHATS THE SOURCE OF THIS BLACK MARKET OIL? In a sudden move on March 8, the government slashed the prices of condensate (condensate is a low-density mixture of hydrocarbon liquids) to Tk 42.60 from Tk 53 for private oil fractionation plant or small-scale refineries. The BPC also lowered the procurement price of fuel oil from non-govt refineries by 30 per cent. As a result, the BPC purchases octane for Tk 58/litre as against the retail price of Tk 99, petrol for Tk 56/litre (retail price Tk 96), and diesel for Tk 55/litre (retail price Tk 68). This huge difference between the retail price and the wholesale rate have allegedly armed the 12 private oil refineries to take unethical chances, and cashing in on the scope, they have discreetly been supplying sub-standard fuel oil to filling stations illegally. ILLEGAL MEANS OF SMUGGLING FUEL OILS: It is alleged that private refineries sell fuel oil directly to filling stations by tank-lorries although such sales are prohibited by law. Only government approved Padma, Meghna and Jamuna oil companies can sell fuel oil to filling stations. While selling oil, the private refineries use fake documents, and they even create fictitious filling stations and fake documents to run their shady business. On October 1, police seized a tank-lorry at Morrelganj in Bagerhat. The Independent found that M/S Sahana Traders, an authorised packed point dealer (dealers who are permitted to sell fuel oil from drums), located at Jatrabari in the capital, had sent the lorry to Morrelganj for collecting oil. The lorry was carrying 13,500-litre fuel oil. However, this dealer did not collect a single litre of fuel oil from Godnail oil depot from July to September. If this was not all, the Sahana Traders authorities sent the lorry using the name of another packed point dealer Bismillah Traders, a fictitious trading entity. The BPC has clearly stated that they dont have any registered dealer by the name of Bismillah Traders. The BPC has summed up that the lorry contained smuggled or stolen fuel oil and it was using fake documents. As a punishment, the BPC later cancelled the permit of Sahana Traders. WARNINGS ARE OF LITTLE AVAIL: There is no statistics on how many filling stations are involved in the sale of fuel oil through illegal means. Bangladesh Petrol Pump Owners Associations co-chairman Md Nazmul Haque told The Independent that finding octane of 95 RON (Research Octane Number), which is globally recognised as safe fuel for auto-mobiles, has become impossible because of adulteration. After probing allegations of adulteration by numerous probe bodies, the BPC has sent notices to 150 filling stations, and deputy commissioners in 64 districts for taking necessary actions, but of no avail. The government move has paved way for the BPC and oil distribution companies to realize extortion worth Tk 5-6 lakh from filling station owners cashing in on the notices. The number of filling stations is going up as the economy of the country is growing. About 100 new filling stations have been set up in the country over the past one year. In 2014, the number of filling stations was 1,802, which currently stands at 1,894. The number of packed point dealers also increased by this period and it now stands at 3,605. It is alleged that the authorities concerned are flouting rules while approving licenses for filling stations. Although rules state that there can be no filling stations within the radius of 2-killometre of another station in urban and 4-killometre in rural areas, those rules are being flouted often. HARMFUL EFFECT OF ADULTERATED FUEL OILS ON AUTOMOBILES: Hasan Ferdous, a Toyota SUV owner, bought 80-litre octane from Khaleq Filling Station at Mirpur in the capital three months back. He left Dhaka for Khulna, but his car lost ignition at Savar. Later, he had to change the fuel oil from his vehicles oil tank and refuel it to get the SUV going. Hasan told this correspondent that he had the octane bought from Mirpur tested out of curiosity. The results show that the octane was supposed to be of 95 RON grade but it actually was of 88 RON grade. This correspondent spoke to two truck drivers -- Hamid and Suja -- at Karwanbazar Truck Stand in the capital. They both said that they have recently been facing trouble while driving their vehicles as the quality of diesel went down drastically. The drivers said that the sub-standard fuel oil was harming their vehicles engines. Owner of a workshop at Mohakhali in the capital, preferring anonymity, said majority of the vehicles he repairs come with engine problems nowadays and that the number has registered a significant rise in the recent time. LACKLUSTER IMPLEMENTATION OF REGULATORY INITIATIVES: BPC Chairman Badruddoza chaired a meeting on adulteration of fuel oil on October 14 this year. In that meeting, the Jamuna Oil Company Limiteds managing director said monitoring in this regard is not effective. Adulteration has played havoc with the fuel oil sector. He also said that responsible filling station owners and private fractionations must be subjected to stern action. The meeting decided to serve notices to 150 filling stations and their licenses will be annulled as per clause 30 of the regulation for setting up filling stations. However, the authorities are yet to cancel the licenses of any of the errant filling stations. An expert committee strongly recommended that movement of oil tankers through the Bangabandhu Multipurpose Bridge and Lalon Shah Bridge should be stopped as oil is usually transported to Khulna and the northern region from Chittagong on waterways. However, the authorities are yet to implement the decision prescribed by the experts. Another decision was that the BPC-subsidised Padma, Jamuna and Meghna would randomly test fuel oil sold by 10 filling stations apiece and if any adulteration is found then stern actions would be taken against the fuel stations. Yet, for some unknown reasons, this decision was not implemented as well. According to BPC, Sajjadul Islam Kabul, president of Bangladesh Jalani Paribeshak Samity and also the owner of 15 filling stations in Khulna and Jessore regions, is one of the prime accused of fuel adulteration. He partially admitted the allegations against him and said that there are some irregularities at his filling stations. He told The Independent that he has licenses for buying oil from three state-run companies. He also tried to defend himself, saying that sometimes it happens that he collects oil for one of his 15 filling stations and sell it in another of those stations to meet emergency requirement of the latter. Hence, you cannot say that the second station collected the oil from black market, he said. Energy expert M Tamim told The Independent that such state of the energy sector is alarming for the country and this could lead to the collapse of the sector as well as the economy as a whole.