Tk425 crore lost in illegal condensate dealings over one year

Private refineries have been illegally selling condensate to filling stations instead of the Bangladesh Petroleum Corporation, costing the national exchequer Tk425 crore in just one year, a BPC insider has claimed. The refineries generally buy condensates produced in gas fields run by state-owned Petrobangla and other international oil companies under a government contract to produce fuels such petrol, diesel, octane and kerosene. However, a total of 11 named refineries have reportedly been selling condensate to different privately-owned filling stations in backroom dealings, violating the contract and defying the yield pattern of the Energy and Mineral Resources Division (EMRD). Natural gas condensate is a low-density mixture of hydrocarbon liquids that are present in raw natural gas extracted from gas fields across the country, while yield pattern refers to the proportional rate of produced fuel oils processed from condensate. “The BPC’s marketing companies have witnessed a downward trend in fuel sales in the last couple of years,” a BPC official told the Dhaka Tribune on condition of anonymity. “Investigation later revealed that some corrupt businessmen have been selling the condensate to many petrol pumps.” BPC’s marketing companies are Padma Oil Company Limited, Meghna Petroleum Limited and Jamuna Oil Company Limited. “Though private refineries were supposed to sell refined condensate to these companies, they did not deliver the processed fuel oils following the EMRD yield pattern,” said the official. Currently, there are four public and 13 private condensate fractionation plants, which produce petrol, diesel and octane. According to the EMRD directive, private refineries are supposed sell at least 45% of their petrol and 16% of their diesel to BPC following the yield pattern. But they apparently only deliver 4-40% of the 61% volume of petrol and diesel combined. The official said the government stopped selling condensate to the private refineries after it suffered the Tk425 crore loss in the 2015-16 fiscal year. The 11 companies that apparently contributed to the huge loss are: Super Refinery (Pvt) Ltd, Aqua Mineral Turpentine & Solvents Plants Ltd, Chowdhury Refinery Ltd, PHP Petro Refinery Ltd, Synthetic Resin Products (Pvt) Ltd, JB Refinery Ltd, Lark Petroleum Company Ltd, CVO Petrochemical Refinery Ltd, Universal Refinery (Pvt) Ltd, Rupsa Refinery (Pvt), and Golden Condensate Oil Refine Factory Ltd.Sales reboundWhen adulterated petroleum was flooding the local market between October 2015 and June 2016, the BPC’s sale of petrol was at 104,480 tonnes while the figure for diesel was 2.8 million tonnes. However, once the corporation resumed selling to private refineries under the yield pattern, petrol sales jumped by 83% to 191,299 tonnes and diesel by 8% to over 3 million tonnes between October 2016 and June 2017. “Sales of petroleum fuels increased after actions were taken against some private condensate fractionation plant owners,” BPC Director (marketing) Mir Ali Reza told Dhaka Tribune. The parliamentary standing committee on the power, energy and mineral resources ministry discussed the Tk425 crore loss and illegal condensate trading in a meeting on July 24. It also received accusations that condensate with high-level lead was being mixed in all types of fuels including petrol, diesel and octane. The committee recommended taking legal action against those involved and formed a three-member team led by Member of Parliament Md Abu Zahir to look into all the allegations, identify the culprits and submit their findings “as soon as possible”. Government officials have also said that the Anti-Corruption Commission is also investigating several private refineries over alleged irregularities and corruption.‘Ruined reputation’Petrol Pump and Tank-Lorry Owners Association President Mohammad Nazmul Haque said his group had urged the government “several times” to take action over the illegal condensate dealings, but that nothing had happened. “Recent monitoring has somewhat decreased the illegal condensate selling,” he said. “While this trade has ruined the reputation of our business, some corrupt businessmen and owners are making huge profit from this.” Speaking to the Dhaka Tribune, Petrochemical and Refiners Association President Irshad Hossain rejected the allegations. “The BPC has made the account of losses as they seemed fit. There was no yield pattern before. But after it was introduced on September 1, 2016, we have maintained the pattern in supplying petrol and diesel,” he claimed. Irshad said the BPC used to export condensate aboard some years ago. “After our refineries started operating, we are now refining the condensate and producing petro, diesel and octane inside the country.” Irshad said the BPC had managed to bring a major achievement in the private sector through producing fuel to meet the country’s energy demand. “(But) now, our businesses are being obstructed in many ways and we are treated intolerantly,” he said.‘Prices need to be refixed’Meanwhile, another BPC official who wished not to be named said the buying of diesel and petrol manufactured by local private plants was “not profitable for us”. “BPC buys product from these plants only to ensure usage of local condensate, which costs it more,” he said. “It will be profitable if BPC imports condensate and refines that through our subsidiary company, Eastern Refinery Ltd, as the condensate prices have dropped in the global market.” The BPC currently buys per litre diesel at Tk58, petrol at Tk60 and octane at Tk67 from the local private refineries, the official said. But if the condensate is imported and refined at Eastern Refinery, the expenditure would fall to Tk47 for per litre diesel, Tk44 for petrol and Tk55 for octane. “The prices need to be refixed,” the official said. The amount of loss or profit from the last fiscal year 2016-17 was not available to be included in this report.