The government has allowed five furnace oil-based private power plants with a total capacity of 473 megawatt to import fuel oil without tax.
In 2011, the government opened import of fuel oil under private initiative for electricity generation when the fuel prices were very high in the international market.
The private sector has been enjoying supplementary duty and VAT-free fuel import facilities for electricity generation since then.
But Bangladesh Petroleum Corporation (BPC), the sole government organisation for the import and distribution of fuel oil in the country, has always opposed the decision.
A BPC director said the corporation is incurring losses because of such decisions. He said the BPC can supply fuel oil to the power plants when needed.
On August 7, 2017, a separate letter regarding the permission signed by Power Division Deputy Secretary Mohammad Nazmul Abedin was sent to the BPC.
According to the letter, the Acorn Infrastructure Services Ltd, which owns a 100MW power plant at Julda in Chittagong, needs to import 125,000 tonnes of fuel oil.
Bangla Trac Communication Ltd will import the fuel oil under some terms and conditions during the period between September 1, 2017 and June 30, 2018.
ECPV Chittagong Ltd, which owns 108MW power plant in Patia, Chittagong, needs to import 130,000 tonnes of oil maintaining related terms and conditions through own systems from September 25, 2017 to September 24, 2018.
Khulna Power Company Limited owns three power plants: 115MW in Khulna, 40MW in Noapara of Jessore and 110MW Barge-Mounted Power Plant. It needs to import 230,500 tonnes of oil under its own system from October 1, 2017 to September 30, 2018.
Among the terms and conditions in the import of oil, the companies need to have deals with the BPC, which requires giving royalty.
Besides, a BPC representative will be in the plant site to see the use of fuel oil.
The imported oil cannot be sold in open market or to other power plants.
The Power Division wants to allow the private sector to import tax-free furnace oil but the Energy and Mineral Resources Division wants to retain its previous sole authority to allow import of furnace oil by paying tax. At present, 14 private sponsors are importing over 1m tonnes of furnace oil a year taking the advantage of 9% service charges.
Currently, the cost of imported furnace oil is Tk22 per litre against the BPC’s price of Tk42 per litre.