India’s state-owned Indian Oil Corporation Limited (IOCL) has submitted a proposal to Bangladesh Petroleum Corporation (BPC) recently, expressing its interest to export around 5,000 tonnes of diesel to Bangladesh every month through the waterways, said officials.
The IOCL intends to supply the fuel oil to the BPC's newly built 100,000 tonnes capacity Mongla oil depot.
BPC officials said we have not yet taken any decision regarding the IOCL's proposal. The BPC would examine the pros and cons of the proposal before taking any decision.
Presently, Bangladesh imports around 4,400 tonnes of diesel every month from the Numaligarh refinery of Assam, owned by another state-owned Indian oil company Bharat Petroleum Corporation Ltd.
If the IOCL initiates exporting diesel using waterways, the total volume of India's diesel export to Bangladesh would reach to around 9,400 tonnes.
The IOCL has offered to supply diesel at a premium rate of $ 1.51 per barrel, if the petroleum product is imported on FOB (free on board) basis, meaning the BPC would have to bear the transportation costs.
The premium rate would be $5.27 per barrel, if the petroleum product is imported on CFR basis, meaning the IOCL would have to carry the petroleum product to Mongla oil depot at its own expense.
As per fuel specifications, the IOCL's diesel would have 0.05 per cent sulfur content at the maximum.
The IOCL has planned to use lighter vessels to transport the fuel oil from its Haldia refinery of West Bengal to Mongla.
Currently, the BPC is carrying fuel oil from Chittagong oil depot to Mongla depot.
According to officials, the BPC has been importing diesel from the Numaligarh refinery to its Parbatipur oil depot using railways since October 2017.
Currently, the BPC has been importing the fuel oil in two consignments – 2200 tonnes in each consignment-every month.
But the BPC can import three to four consignments of diesel every month under the agreement between the BPC and the BPCL, the officials said
The BPC pays a premium rate of $ 5.50 per barrel on CFR basis to import Indian diesel from the Numaligarh refinery.
Indian diesel is being consumed by clients around Parbitupur localities.
To meet the domestic demand, BPC currently imports around 4.5 million tonnes of gasoil annually.
About a decade back, the BPC had imported diesel of a small quantity of 3,500 tonnes from the BPCL for a brief period in 2007.
The BPC had also imported around 400,000 tonnes of diesel from the IOCL during 2005-06.
Separately, the BPC and the BPCL are working together to build a 130-kilometre cross-country pipeline to trade diesel, which is now under constructed from India’s West Bengal’s Siliguri up to Parbatipur oil depot of Bangladesh.
The BPCL will bear the entire costs for the construction of the pipeline and the BPC will import diesel through the pipeline at least for 15 years.
The oil pipeline will supply one million metric tonnes of high-speed diesel per year to Bangladesh. The diesel is currently transported through a cross-border train from Numaligarh refinery in north eastern state of Assam to Dinajpur in Bangladesh. The railway lines will connect Joydevpur and Tongi with Dhaka.
The cross-border pipeline will go through Panchagarh, Nilphamari and Dinajpur to reach Parbatipur oil storage tanks inside Bangladesh.
Bangladesh Petroleum Corporation (BPC) officials said currently, the oil demand is around 70 lakh metric tons in the country. This demand is increasing every year. Of these, about 67 lakh metric tons is being imported. When the Bangladesh-India inter-border pipeline is built, a large portion of the imported oil will come through the pipeline. The state-run Bangladesh Power Development Board (BPDB) will build a 150 megawatt (MW) diesel-fired power plant at Saidpur by 2020 and the diesel would be imported through the proposed 130 km cross-country pipeline. Around 150,000 tonnes of diesel would be required for the plant annually.
