State-owned Bangladesh Petroleum Corporation (BPC) is set to sign a 15-year sales and purchase agreement with Indian oil company Numaligarh Refinery Ltd (NRL) on October 22, for importing diesel to meet local demand.
“We hope that the agreement will be signed during Indian Foreign Minister Sushma Swaraj’s upcoming Dhaka visit,” BPC Director (Operations and Planning) Sayed Mohammad Mozammel Haque told the Dhaka Tribune on Thursday.
“Diesel will be imported through a cross-border pipeline from the Indian oil refinery, located at Golaghat in the north-eastern state of Assam. Bangladesh will receive the oil at Parbatipur petroleum depot in north-western district of Dinajpur.”
Mozammel confirmed that the BPC would import 250,000-300,000 tons of diesel each year, following the construction of a 130km cross-border Indo-Bangla Friendship Pipeline.
India will construct the pipeline, of which 125-km will be located in Bangladesh. The BPC official is optimistic that the pipeline will be built within the next two years.
Managing Director of NRL, a subsidiary of India’s state-run Bharat Petroleum Corporation Ltd, P Padmanabhan and BPC Director Mozammel will sign the agreement on behalf of their respective countries in Dhaka.
The BPC will pay NRL a premium of $5.50 per barrel while the diesel price will be fixed according to the rate in the international market.
Bangladesh currently imports diesel with a premium of $4.4 per barrel from international markets. However, added costs rise to $5.50 per barrel when transport costs for distributing the oil at local depots are calculated.
The government is set to build a diesel-based 150MW power plant in Nilphamari. Fuel for the plant will be imported from NRL.