FHM Humayan Kabir

The government will import 1.4 million tonnes of refined fuel oil worth nearly US$850 million from Malaysia next year in a major shift of sourcing from existing Gulf exporters to meet the domestic demand, officials said Monday.

Energy ministry officials said the state-run oil Bangladesh Petroleum Corporation (BPC) will sign a deal with the Malaysian state-owned company Petronas Trading Corporation SDN. BHD (PETCO) shortly to supply the fuel.

BPC and PETCO have reached a consensus on the premium issue for supplying oil during a two-day negation from September 9-10 in Bangladesh, a senior BPC official told the FE.

The BPC has completed the negotiations with the PETCO to procure 1.4 million tonnes or 10.65 million barrels of fuel, lion's share of which is gas oil to be used in the duel-fuel engine like electricity generator.

The government has decided to set up 1360 megawatts (mw) capacity duel-fuel power plats. Some of them are expected to consume gas oil from next year to generate power.

The BPC official said during the January-June period of 1010, the BPC will import 740,000 tonnes of refined oil, including 540,000 tonnes of gas oil, from Malaysia at a cost of US$431.52 million.

The government has recently shifted its fuel oil import destination to the South and South-East Asian countries, including Malaysia, the Philippines, the Maldives and Vietnam in a bid to reduce dependence on single major source Kuwait that claimed higher premiums in recent years.

The BPC has signed deal with Malaysia to import 420,000 tonnes or 3.19 million barrels of fuel oil during September-December period this year.

Under the current term for the July-December period 2009, the KPC is supplying 360,000 tonnes of diesel and 60,000 tonnes of jet fuel to BPC.

Bangladesh consumes about 3.7 million tonnes of oil annually. It imports nearly 1.2 to 1.5 million tonnes crude oil, refined at state-owned Eastern Refinery Ltd, and the rest 2.4 million tonnes refined oil form different oil producing countries.

BPC officials said the premium for the refined oil from the Kuwait Petroleum Corporation (KPC) has been raised in recent years.

He said the country's state-owned oil suppliers had finalised per barrel premium at $4.70 for gas-oil, $6.25 for kerosene and jet fuel and $8.50 for Mogas oil (Octane) during the negotiations with the company PETCO.

A senior energy ministry official said as the government had decided to install duel-fuel power plants they had asked BPC to import such gasoline to feed the proposed electricity generators.

The Power Development Board (PDB) has recently invited tenders for installing 18 duel-fuel based power plants to generate an additional 1360mw of electricity.

The country will require importing around 1.2 million tonnes of additional gas oil to the current imports to run these power plants, PDB officials said.

The officials said it will require augmenting the annual fuel imports by 33 per cent to 4.85 million tonnes from the current 3.7 million tonnes to operate the planned duel-fuel power generators.