The construction of a 130km Indo-Bangla fuel oil pipeline has reportedly suffered a setback after Indian authorities sought an exorbitant premium for exporting diesel to Bangladesh.
During latest negotiations with Bangladesh Petroleum Corporation (BPC), Indian state-owned Numaligarh Refinery Limited (NRL) sought a premium of $21.19 per barrel against $4.5 per barrel.
Seeking anonymity, a BPC official disclosed this to the Dhaka Tribune, adding: “If the NRL does not reduce the premium, the project will not be feasible for the BPC.”
The Indian company proposed Dhaka about constructing 125km of the pipeline on the Bangladeshi side at a cost of Tk450 crore, and also offered to build a 5km portion of the pipeline on their own side.
The pipeline is supposed to connect an NRL terminal in India’s West Bengal town of Siliguri to a BPC depot in the town of Parbatipur in Dinajpur.
The BPC official said the new price demand per barrel could still be feasible if the NRL would ask for $5 a barrel, as the BPC would not require additional cost to supply the imported fuel to Parbatipur.
The Indo-Bangla Friendship Pipeline will allow very large scale diesel imports from India when it comes on line, with plans to import up to 1 million tonnes per year.
The pipeline is supposed to be implemented through a joint venture of the BPC and the NRL, a subsidiary of India’s state-run Bharat Petroleum Corporation Ltd.
A memorandum of understanding was signed on April 22 last year to import petroleum products, especially diesel, via the pipeline. But it retains an option to transport other white oil products in the future.
Bangladesh currently imports petroleum products from around 10 countries.
Meanwhile, the BPC has already sent a draft paper on the joint-venture company. A high-powered team led by BPC Director (operations and planning) Mosleh Uddin last month visited Assam to negotiate the tariff for diesel import.
