S Alam Group left the oil refinery project.
S Alam Group is not involved in the project of construction of fuel oil refinery. After the change of power, the interim government has taken a policy decision not to enter into an agreement with S Alam Group.
Eastern Refinery Limited (ERL) is the only fuel oil refinery in the country. It was created in Chittagong in 1968. The company can refine 1.5 lakh tonnes of fuel oil annually. It is operated by the Bangladesh Petroleum Corporation (BPC) under the Department of Energy and Mineral Resources. Another unit of 3 million tonne capacity is planned for the new project. The project named ‘Installation of ERL-2’ was taken up in 2012. The project, if implemented, is expected to save around $240 million annually.
Some officials of BPC and Eastern Refinery said that S Alam Group was included in the project on the instructions of the former Prime Minister’s office about not signing the contract with the company. The group wanted to take 51 percent ownership in the name of investment here. No one agreed.
BPC favors keeping 60 percent ownership in the hands of the government. Later it was decided to sign a memorandum of understanding without finalizing the partnership. The draft MoU was sent to the Law Ministry in the last week of July for vetting. Officials believe the deal could not have been averted had the government not changed. The Energy Department also did not agree on the construction of the refinery in partnership with S Alam Group.
Two responsible officials of the Energy Department told a national daily that now the contract is proposed to be canceled in the changed circumstances. Now again the implementation of the project will be decided.
Secretary of Energy and Mineral Resources Department of the Ministry of Electricity, Energy and Mineral Resources. Nurul Alam said that the new fuel oil refinery construction project will be implemented with own financing. For its implementation, the contractor will be appointed by inviting open tenders.
The new project is to have a unit of 3 million tonne capacity. The national daily tried to get the S Alam Group’s statement regarding the government’s policy decision regarding the project. However, the mobile phones of S Alam Group Chairman Mohammad Saiful Alam and Executive Director Subrata Kumar Bhowmik were found switched off.
In a letter sent to BPC on February 5, the Energy Department said that the decision to implement the ERL-2 project has been taken on the basis of a joint partnership agreement (Public-Private Partnership) between Eastern Refinery and S Alam Group. BPC, Eastern Refinery and S Alam Group will agree on all issues before the MoU between the two companies. Once the agreement is finalized, Eastern Refinery and S Alam Group will form a Special Purpose Vehicle (SVP) company.
The letter also said that according to the proposal, S Alam Group will construct another refinery of 30 to 50 million tonnes in the existing refinery area of Eastern Refinery. The BPC formed a committee on February 14 to scrutinize the draft MoU proposed by S Alam Group and submit the final report.
Earlier on January 29, S Alam Group jointly sent a proposal to the Energy Department for the implementation of ERL-2. It is also mentioned in the letter that instructions have already been received from the Prime Minister’s Office in this regard to the Energy Department. A draft MoU was sent along with it.
The present Eastern Refinery was built by French firm Technip. The government gave in-principle approval for the new refinery through them. The implementation of ERL-2 project was supposed to cost about 19 thousand 769 crore rupees. Although the Development Project Proposal (DPP) said that this money will be available within 4 years and 9 months after the refinery is commissioned. However, funding could not be secured. A large amount of diesel has to be imported without increasing the refining capacity of fuel oil in the country. The government has to spend extra dollars every year. BPC sells 60 to 65 lakh tonnes of fuel oil annually. Of this, 46 lakh tons of diesel. Six lakh tonnes of diesel is available from the country’s only refinery, the rest has to be imported.
Sources of BPC and Eastern Refinery say that the demand for fuel oil in the financial year 2026-27 can be released by 8 million tonnes. If this demand is to be met through imported fuel oil, there will be pressure on the country’s economy. Foreign exchange cannot be saved. Energy security will be threatened. If refined in the country, it is possible to save more than 15 rupees per liter of diesel. Therefore, the concerned persons feel that it is necessary to implement the ERL-2 project quickly.
A responsible official of BPC said that the demand of petrol is met in the country. 40 percent of octane is domestically produced, while the rest is imported. But the biggest imports are diesel used in transportation and furnace oil for power plants. The new refinery at Eastern Refinery will meet the huge demand of diesel in the country and will create an opportunity to export petrol.
In this regard, M Tamim, the special assistant of the former caretaker government’s chief adviser on energy, said that it was unfair to enter into an agreement with S Alam Group. The Interim Government took a good decision by canceling it. It will be more cost-effective if self-financed. The refinery should be constructed soon.
Source: protham Alo.
