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BPC to import 1.3cr barrels of oil under open tender

by April 18, 2016 General

Bangladesh Petroleum Corporation is set to import 1.3 crore barrels of petroleum products from two Singapore-based entities, a move which will save the government $1 per barrel.

The deal will be carried out under the new petroleum policy, which has made open bidding mandatory for 50 percent of the country’s petroleum imports. Since 2005, all petroleum imports have been made under government-to-government deals.

Emirates National Oil (Singapore) and Unipec Singapore have landed the job of supplying 1.3 crore barrels of petroleum products by offering the lowest premium rate, said a BPC official.

The premium is the cost of shipping the petroleum products and includes freight charges and insurance.

Since the going market rate is used as the price of petroleum, the suppliers differentiate themselves with their premium rates. 

Emirates National Oil has offered $2.37 per barrel as the premium price for gas oil and $3.54 for jet fuel.

Unipec has offered $2.57 per barrel as the premium price for gas oil and $3.06 for jet fuel.

The rates are $1 less than what it would have been under the state-to-state arrangement, according to the BPC official.

A total of 13 companies participated in the tenders but some of them were eliminated for failing to meet the criteria set out under the new rules.

For instance, a bidder must have: an annual turnover of $3 billion, refineries and yearly processing capacity of three million tonnes.

It must have at least five years’ experience in exporting fuel oil and its average export over the last three years has to be two million tonnes.

The bidder’s working capital will have to be $2 billion.

The reference value for per barrel of gas oil was $37.45 per barrel and that of jet fuel was $39.82.

The price given to the suppliers would be the prevailing rate when the fuel is delivered. At present, the price of jet fuel is $46 to $47 per barrel. It was below $40 in February.

The final agreements with the two suppliers will be signed once the cabinet committee on purchase gives its approval, the official added.

The BPC imports fuel worth about Tk 50,000 crore to Tk 60,000 crore a year, but questions remain over its import process and the accounting system.

Even the International Monetary Fund under its extended credit facility loan set a condition that the BPC would have to get audit done by an international firm.