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BPC secures lower prices for oil imports

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by September 3, 2016 General

The cost of importing oil under government-to-government arrangement will be lower than under open tendering.

The premium, which is the cost of shipping petroleum products and includes freight charges and insurance, will be $2.3 per barrel for gas oil and $3 for jet fuel for imports made between July this year and March next year.

In contrast, under the open tender that took place in April for the first time since 2005, the premium stood at $2.37-$2.57 per barrel for gas oil and $3.06-$3.54 for jet fuel.

The development comes after the cabinet committee on economic affairs directed Bangladesh Petroleum Corporation in March to pursue rates under government-to-government deals in line with the open market price.

More than six lakh tonnes of gas oil and jet fuel will be imported in the government-to-government arrangement from Kuwait Petroleum Corporation in the nine-month period.

The petroleum price is always as per the market rate but various quarters raised questions about whether the premium rate was being fixed properly, said an energy ministry official.

“That is why the cabinet committee directed the BPC to purchase half of the annual fuel requirement through open bidding.”

In December last year, the cabinet committee on purchase decided that 50 percent of the petroleum imports made in a year will be through open tender and the other 50 percent through government-to-government deals.

A BPC official told The Daily Star that they have been seeking to fix the premium rate for government to government arrangement as per the cabinet committee directive.

For instance, the BPC has been negotiating rates with Kuwait Petroleum Corporation for premium that is $0.07 to $0.06 lower than that received in the open tender.

Last week, the cabinet committee on purchase approved a proposal to import 1.6 lakh tonnes furnace oil from Singapore’s Vitol Asia, the premium rate for which was fixed through open bidding. The premium fixed was $15.8.

On the same day, the purchase committee gave the nod to another proposal for furnace oil import of 1.84 lakh tonnes to be made under the government-to-government arrangement.

The premium rate would be $15.43 per tonne — lower than that finalised with Vitol Asia. The BPC imports about 50 lakh tonnes of petroleum products annually at a cost Tk 50,000 crore to Tk 60,000 crore.

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