In a major policy shift, the government is moving towards ending its fuel oil monopoly by allowing private organisations to import, refine, distribute and store fuel oil in the country.
To this end, a gazette notification was published by the Ministry of Power, Energy and Mineral Resources on Monday. Under the new policy, oil refineries can be set up under private initiative.
Until the decision, the state-owned Bangladesh Petroleum Corporation (BPC) used to import and distribute fuel oil. Now the new fuel policy breaks the chain of this monopoly.
According to the gazette, private refineries must supply 60 per cent of their total fuel oil production to BPC at the government-fixed price for the first three years of operations.
The remaining 40 per cent can be sold through their distribution channels. However, if a private refinery is unable to sell this remaining 40 per cent, it can sell it to BPC.
In the next two years, private refineries will be allowed to sell a maximum of 50 per cent of their production independently. But if there is no demand from BPC, they can also export fuel oil.
However, experts term it a “destruction of public interest”.
In a recent interview with The Business Post, energy expert Professor M Shamsul Alam said that oil sector privatisation may be a catastrophic decision which can create a chaotic situation in the market soon.
“The government has consistently sold fuel oil at a uniform price throughout the country, preventing oil shortages. However, if the industry is privatised, it could result in price manipulation and manufactured shortages. Fuel oil is a critical and strategic resource for the economy, and its privatisation could have a significant impact on overall economic stability,” said Shamsul Alam.
Private entrepreneurs can set up petrol pumps across the country to sell their fuel oil. Fuel oil must be sold at the government-fixed retail price. Private refineries must have a minimum production capacity of 15 lakh tonnes per year.
A BPC official, speaking on condition of anonymity, stated that the current total demand for fuel oil is 65 lakh tonnes. If five private refineries are established, they could meet the entire national demand, rendering the state-owned refinery Eastern Refinery Limited obsolete.
In essence, similar to the power sector, government refineries would become inactive, and BPC would be forced to purchase oil from the private sector.
Furthermore, if private refineries begin selling oil directly through their petrol pumps, BPC's business could be severely impacted.
Consequently, individuals concerned believe that this detrimental decision should be reversed.