Home ›› 15 Mar 2023 ›› Front
Diesel imports from India through the India-Bangladesh Friendship Pipeline (IBFPL), due to be inaugurated on March 18, will save Bangladesh an estimated Tk 80 crore annually, according to officials of the Ministry of Power, Energy and Mineral Resources.
The premium cost of importing diesel through the cross-border pipeline will be half as there is no shipping cost, meaning Bangladesh will get the fuel at an affordable price, they said.
Sources at the ministry said Bangladesh Petroleum Corporation (BPC) buys oil at prices published in magazine plates in Singapore. The fuel price is determined by calculating the average of the prices published on the plates on the day the BPC ships load the oil, the previous day and the day after the ships’ departure. Other expenses, including shipping costs and insurance, are called premiums.
Currently, the premium cost of buying oil from the international market is $11 per barrel. The premium for oil coming through the pipeline from India will be $5.5 per barrel.
This will save Bangladesh $5.5 per barrel. As a result, once oil supply from the pipeline starts at full capacity, it will save the country Tk 80 crore annually.
Moreover, State Minister for Power, Energy and Mineral Resources Nasrul Hamid said the quality of oil imported through the pipeline will be of international standards.
Addressing a rally at the oil receiving point of the pipeline at Parbatipur in Dinajpur on March 10, he said, “We will determine the quality of oil coming from India. The sulphur content of the oil will be below 10 ppm. It is very good quality oil as per the international index.”
India is buying oil from Russia at a low price. But Bangladesh cannot take advantage of that price as the country will have to buy the fuel from India at international prices. But since the premium cost will be halved, the price of oil will come down.
Oil to be supplied to 16 districts
According to sources at the energy ministry, the diesel imported from India will be supplied to 16 districts of the northern region, including Dinajpur, Lalmonirhat, Panchagarh, Rangpur and Nilphamari. Currently, oil is supplied to these districts from the Baghabari oil depot in Sirajganj using trucks.
Under the existing contract between Bangladesh and India, the former will import oil through the pipeline for 15 years. In the first three years, 200,000 tonnes of oil will come annually.
The amount will increase to five lakh tonnes in the fourth and fifth years. In the remaining 10 years, Bangladesh will import 10 lakh tonnes of oil annually through the pipeline.
If the agreement is not renewed after the initial term ends, Bangladesh will have the sole authority and ownership of the pipeline.
A reception centre for the pipeline has been set up at Parbatipur in Dinajpur. There is already an oil storage depot there, which can store 14,000 tonnes of oil.
Its capacity has now been increased to hold 43,000 tonnes of oil, which will last 60 days in 16 districts of the northern region. Apart from this, the Syedpur 150 MW power plant will run on diesel supplied from the depot.
Rented equipment
The IBFPL is going to be commissioned on March 18. The petroleum will come through the cross-border pipeline from India’s Numaligarh Refinery Limited (NRL) located in Golaghat in the north-eastern state of Assam.
Initially, Bangladesh will run the project using equipment rented from NRL, including its Operation & Maintenance and Mobile Oil Spill Recovery Unit (MOSRU).
According to sources at the Project Review Monitoring Committee (PRMC) formed by officials of the two countries, the equipment will be rented for three to six months. NRL and MOSRU have already agreed to a proposal from BPC in this regard.
Seeking anonymity, an official of the committee told The Business Post that Bangladesh has yet to import all the equipment needed to receive the oil. “Hence, the equipment is being rented.”
In 2018, Bangladesh signed a memorandum of understanding with India for the construction of the 131.5-kilometre pipeline. Five kilometres of it will be in India, and Bangladesh will hold 126.5km.
BPC is implementing the Bangladesh part, and NRL the Indian part. Dipon Gas has constructed the pipeline at a cost of Tk 3,623 crore.
