Bangladesh Petroleum Corporation (BPC) and French firm Technip signed a memorandum of understanding (MoU) to set up a new Tk 89.49 billion (8,949-crore) second unit at the Eastern Refinery Limited (ERL), for refining 3.0 million tonnes of crude annually, under a Joint Venture (JV) project.
However BPC will operate the planned ERL Unit -2 by December 2018, according to the MoU. ERL now refines 1.5 million tonnes of crude a year. When the second unit becomes operative the total refining capacity of the ERL will reach 4.5 million tonnes a year.
BPC Secretary and the Technip top official signed the MoU on behalf of their respective organisations at Pan Pacific Sonargoan hotel on Wednesday evening.
Finance Minister AMA Muhith, State Minister for Power, Energy and Mineral Resources Nasrul Hamid , BPC Chairman AM Badruddoza , Ambassador of France in Dhaka Sophie Aubert and senior officials of the energy ministry and BPC were present at the signing ceremony.
"The country is going to triple its capacity to refine 4.5 million (45 lakh) tonnes of petroleum annually through implementing this project that will help us to save Tk 1,500 crore foreign currency from fuel imports per year," State Minister for power, Energy and Mineral Resources Nasrul Hamid said.
ERL was built by Technip near Chittagong port in 1967 and under the MoU the same French company will expand it for the first time in the past 78 years.
"It is 'Eastern Refinery Unit-2', however, it would be help us to make petrol, octane and other petroleum products from the condensate (a bi-product of gas)," the state Minister said.
BPC spent Tk 26940.85 crore to import 53.93 lakh tonnes of refined and crude oil in the last fiscal year. The state owned loosing agency imports petroleum in large quantities with the support of IDB, IMF and local resources.
The industry's insiders says that this second unit will not contribute any thing in energy business as the government allowed the private companies, especially the liquid fuel based power plant owners to importre refined petroleum products.
"They (power plant owners) are procuring their required quantity of fuel from the international oil market and enjoying the different sorts of waivers on tax and VAT as per government rule, so who will buy from here," a senior official asked.
Due to this reason the furnace oil consumption dropped to 57,150 tonnes in March and 55,280 tonnes in April against the demand for 96,098 tonnes and 92,999 tonnes respectively in 2015.