Privately-owned petrochemical and fractionation plants in Bangladesh are preparing to resume commercial operations after a three-year hiatus, as the government plans to import diesel-rich condensate to kickstart their activities.
The state-run Bangladesh Petroleum Corporation (BPC) has chosen Indonesian energy company PT Bumi Siak Pusako (BSP) through an international tender to supply approximately 30,000 tonnes of diesel-rich condensate.
The BPC has submitted a proposal for condensate purchase to the Cabinet Committee on Government Purchase for approval.
PT Bumi Siak Pusako has offered to supply the condensate at the international market price with an additional $19.5 per tonne premium. Once imported, the BPC will provide the fuel to various petrochemical and fractionation plants for refining and mainly producing diesel.
These plants will also be able to produce lighter kerosene, specifically treated for use as a thinner solvent in paints and varnishes. Following successful trial production, the plants will independently import condensate to produce diesel and other necessary byproducts.
The private plants have incurred losses during the non-operation period and continue to pay interest on bank loans.
The government plans to purchase diesel from these plants at international market prices. The Energy Division recently issued a gazette notification introducing an ‘automated pricing formula’ for internal pricing of various petroleum products, including diesel, based on their monthly price movements in the international market.
According to the pricing formula, the BPC will buy diesel at 1.0% below the international price. The byproducts will be sold to different paint industries and clients.
Private refineries, including CVO Petrochemical Refinery Ltd., are gearing up to produce diesel following the government’s latest decision.
Several privately-owned petrochemical and refinery plants in Bangladesh have been closed since June 2020 due to a lack of condensate supply.
Allegations were made against some private sector refiners for selling condensate without refining it to petrol, prompting a halt in their operations.
The closure of these plants has resulted in bank loans of around Tk 20 billion remaining unpaid and approximately 5,000 employees losing their jobs.
The country’s annual diesel requirement stands at approximately 6.0 million tonnes. The BPC imports the majority of diesel as refined products while producing a small portion at its subsidiary, Eastern Refinery Ltd (ERL).