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Fresh deals to cost BPC extra $11m in oil imports

  • Published at 07:58 am June 13th, 2013
Fresh deals to cost BPC extra $11m in oil imports

Bangladesh Petroleum Corporation (BPC) has finalised contracts with eight foreign companies to import refined fuel oil for the second half (July to December, 2013) of this year, involving higher premiums than the previous contracts.

The country’s lone oil importer and distributor will have to spend an additional amount of around US$11m, because of the increase in price.

Officials said the premium (freight and other costs) for all the petroleum products except furnace oil has increased this time as freight charges have gone up globally. 

A high-powered delegation, led by Energy Secretary Md Mozammel Haque Khan, went to Singapore to negotiate the premium for the oil purchase for the period.

The premiums – transportation, insurance and other costs – are reviewed every six months.

Under the government-to-government (G2G) contracts, BPC signs minimum two-year deals with interested National Oil Companies (NOC) of other countries.

The premium hike was due to multi-level commissions added to the oil prices and under-table deals between BPC high-ups and NOC agents stationed in Bangladesh, a high official told the Dhaka Tribune, requesting anonymity.

The agents reap benefits through manipulating small rises in the premium, $0.5-1.0 per tonne, which amounts to millions as the average volume of order stands at 5m tonnes, said the officials.

BPC Chairman Md Eunusur Rahman on Wednesday said the premium for import of diesel increased to $4.8 per barrel for the July-December period of this year as compared to $4.30 per barrel of January-June period of this year and $3.80 per barrel of the July-December period of last year.

During the next six month period, 1.5m tonnes of diesel is estimated to be imported while other imports include: furnace oil 500,000 tonnes, Octane 50,000 tonnes, jet fuel 175,000 tonnes and kerosene 42,000 tonnes.

In the contract the premiums for jet fuel and kerosene have been set at $5.80 per barrel, up from $5.30 per barrel from the January-June period of this year, and $4.80 from the July to December period of last year.

The premium for octane import rose to $7.50 from $7.35 from the January-June period of 2013 and from $7.05 from the July-December period of last year.

The premium for furnace oil, however, dropped by $2.5 per tonne to $37 from $39.50 of the 2012-13 fiscal year.

The suppliers are Kuwait Petroleum Corporation (KPC), Malaysia –based PETCO – a trading wing of Petronas, UAE-based Emirates National Oil Company (ENOC), Petrochina – trading wing of Chinese national oil company, Egyptian National Oil Company or Midor, Vietnamese National Oil Company or Petro Limex, Philippines National Oil Company or PNOC and Bumisiek of Indonesia.

BPC will send a report to the cabinet committee on public purchase for approval, BPC Chairman said.

BPC annually imports about five million tonnes of crude and refined oil at an average price of Tk500bn. 

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