Energy Bangla

The government is virtually giving up to private companies the entire business of furnace oil import for power plants established in both public and private sectors as the energy division is planning to stop importing furnace oil from 2016.
‘We are planning to stop importing furnace oil from the next year as the operation has become complex and expensive for Bangladesh Petroleum Corporation…We will soon instruct BPC to take necessary steps,’ energy division secretary Md Abu Bakar Siddique told sunday.
There is a market for about 1.6 million tonnes of furnace oil a year in Bangladesh while the corporation’s Eastern Refinery produces some 300,000 tonnes from imported crude, officials concerned said.
They alleged that furnace oil import was made complex and expensive for the corporation by some recent decisions and steps taken by the government.
The government in 2012 allowed six rental power companies to import furnace oil without customs duty and VAT, and giving them 9 per cent service charge depriving its own enterprise Bangladesh Petroleum Corporation, the officials said.
Private companies having the tax waiver and the service charge import each litre of furnace oil at Tk 10-Tk 12 less than the corporation’s import prices.
Fourteen private power companies have so far obtained government approval for furnace oil import and nine of them are now in operation while the rest five are in planning stage.
The officials said that the situation was further aggravated as the corporation was not allowed to reduce the furnace oil price in line with the international market that started declining since June 2014. Corporation’s main customer state-run Power Development Board reduced the purchase of the pricy fuel from the corporation to run its own power plants and those installed in private sector, they said.
The power board, instead, prefers to buy cheaper electricity from the private suppliers who spend less than half the cost for furnace oil imported by themselves than that of the plants that use costly furnace oil imported by the corporation, they said.
Asked, how PDB and other private power suppliers would meet their demand for furnace oil, the energy division secretary said that the power board had a plan to import furnace oil.
Power board officials, however, said that the board would prefer to buy the cheaper furnace oil imported by the private companies.
Now the corporation and nine private companies import furnace oil to feed 34 power plants with a combined generation capacity of about 2,300MW, they said.
State minister for power, energy and mineral resources Nasrul Hamid avoided New Age query on several occasions why the corporation was not given the same facilities the private companies were enjoying in furnace oil import.
Ministry officials said that contradictory government policies had prompted the power board to buy more electricity from the rental suppliers, who operate their plants with the cheaper fuel, to reduce its losses.
They said that the tax benefit and service charge on furnace oil import aided by the price fall in the international fuel market since June 2014 had enabled the private importers of furnace oil to supply electricity at a much lower price.
BPC chairman AM Badruddoja said that the power board received nearly half of the quantity it had asked the corporation to supply in 2014-15 financial year.
In the wake of sluggish consumption of furnace oil by the power board and some other private power plants, the corporation had to pay a huge amount of money in penalty at the rate of $15,000 per day for keeping furnace oil carrying cargos waiting for unloading the oil.