BD to import half fuel oil needs thru open tender

Dhaka,  Mon,  25 September 2017
Published : 17 Oct 2016, 21:20:38

BD to import half fuel oil needs thru open tender

It will help cut costs substantially from next year

The government is expected to source half the total refined petroleum products to be required next year from the international market through open tendering and the remaining half through government-to-government negotiations with the state-owned international oil suppliers, said officials.

"We are trying to import the petroleum products at cheaper rates through open tendering in a transparent manner," a senior BPC official said. It would help cut import cost.

State-owned Bangladesh Petroleum Corporation (BPC) will import around 4.0 million tonnes (mt) of refined petroleum products in next calendar year, including 0.05 per cent sulfur gasoil (diesel), jet A-1 fuel, 180 centistokes high sulfur fuel oil (furnace oil) and superior kerosene. At the end of this year, the import is estimated to stand at similar quantity.  

Officials said BPC might be able reduce the premium rate significantly under the open tendering mechanism, which might push the rate of premium of term deal too.

The BPC might have the opportunity to source oil from new suppliers as well under the new oil import mechanism, the official added.

The premium rate under the open tendering is around 25 per cent less compared to the premium rates under the BPC's term deals, he added.

Premium rate is a component of the oil-pricing mechanism under CFR (cost and freight) basis, which includes the costs of fuel freight, insurance and evaporation as well as loading and unloading losses.

Under term deals until May 2016, the BPC had imported 0.05 per cent sulfur gasoil at the premium rate of US$4.40 per barrel to MoPAG gasoil assessments, on CFR basis.

It imported jet fuel at a premium rate of $5.40 per barrel as per MoPAG jet fuel assessment.

But with the introduction of open tendering the premium rates both for open tendering and term deal came down to around $2.5 per barrel for gasoil and $3.5 per barrel for jet fuel, said officials. MoPAG is the benchmark in oil pricing prepared by Platts, a US-based energy information provider and analyst.

The BPC had imported refined oil products only under term deal through negotiations with oil suppliers until May 2016.

After May 2016, BPC had decided to import refined oil only through open tendering for the rest of the year (June-December, 2016).

It subsequently wrote to suppliers including Kuwait Petroleum Corporation, Malaysia's Petco Trading Labuan Company, Emirates National Oil Company, PetroChina Singapore, Chinese Zhenhua Oil Company Ltd, Petrolimex Singapore of Vietnam, Philippine National Oil Corporation, Indonesia's Bumi Siak Pusako, Unipec Singapore, PB Trading Sendirian Berhad of Brunei, Turkish Petroleum International Company and Oman Trading International to cease supplying fuel until December 2016.
Editor : A.H.M Moazzem Hossain
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