Although the process was initiated almost three years ago, no significant headway has been made in setting up the second unit of the Eastern Refinery Limited (ERL) – which was scheduled to be completed by June 2016.
Once set up, the new unit would have the capacity of refining around 3.5m tonnes of crude oil annually – three times more than the existing one.
In order to move ahead with the project, Prime Minister Sheikh Hasina – who is also the minister in-charge of the Power, Energy and Mineral Resources Ministry – had already given her consent earlier this year under the Speedy Supply of Power and Energy (Special Provision) Act.
Following the permission, the Energy Division was supposed to directly invite foreign companies for proposals to build the second unit, said an Energy Division official, adding that after six months however, the division changed its mind and decided to first appoint a firm to prepare a proposal and then invite other companies.
“The project’s implementation process started three years back. But no significant progress has been made so far,” BPC Chairman Md Eunusur Rahaman told the Dhaka Tribune.
The ERL, under Bangladesh Petroleum Corporation (BPC), will implement the project.
Eunusur added that a 30-acre piece of land near the Eastern Refinery has already been acquired for the expansion, which has an estimated construction cost of around Tk76.2bn.
After the premier’s permission, the Energy Division acted in accordance with the special act and formed a seven-member Project Processing Committee (PPC) including Finance and Law Ministry officials to negotiate with different foreign companies. The PPC will now invite foreign companies to fulfil the project.
“We will now invite expression of interest (EOI) to appoint a project management consultancy firm which will prepare a proposal to invite the companies,” Eunusur said. Besides, if any foreign company submitted their proposal showing interest to work in the project, it would also be considered, he added.
The Chinese state-owned China National Petroleum Corporation (CNPC) has already shown their interest to install the unit.
Earlier, the BPC negotiated with a Chinese state-owned firm Wuhun Engineering Company Ltd to implement the project. Both sides were unable to reach any conclusion in this regard.
Located in Chittagong, the country’s lone refiner – Eastern Refinery – currently refines 1.3m tonnes of crude oil per year while the capacity is 1.5m tonnes. The existing unit is able to meet only 10% of the country’s demand.
The BPC annually imports about 5m tonnes of crude and refined oil at an average price of Tk500bn, according to official data.