Second Summit power plant to get furnace oil import permission

M Azizur Rahman

The government is set to allow yet another private firm, the second one, to import furnace oil from international market to run its oil-fired power plant 15 years after the previous approval, a top official said Friday.

He said state-owned Bangladesh Petroleum Corporation has already issued a no-objection certificate to the proposal of the privately-owned 102 megwatt (MW) capacity Summit Narayanganj Power Plant to import furnace oil, BPC Chairman Md Eunusur Rahman told the FE.

He said the private firm, owned by local Summit Group, would be able to start import fuel from international market after getting final nod from the country's Energy and Mineral Resources Division under the Ministry of Power, Energy and Mineral Resources, he said.

The state-run BPC is currently supplying HSFO to the power plant, he said.

The private firm would be able to import around 100,000 tonnes of furnace oil in a year as per its requirement, he said.

The private firm would, however, not be allowed to sell furnace oil in the open market in Bangladesh, Mr Rahman said.

The BPC will monitor the use of furnace oil by the power plant, he said.

State-owned Bangladesh Power Development Board (BPDB) will make payment of furnace oil imports to the private power plant company as per the international market prices with 9.0 per cent service charge, a senior BPDB official said.

The BPDB, the sole electricity buyer from commercial power plants in Bangladesh, will continue purchasing electricity from the power plants as well, he added.

The service charge is supposed to be reviewed every year, the official said.

The BPDB will make payments to private power companies within three months of oil imports, he added.

The BPC Chairman said the clearance to import furnace oil is being given to the private firm in line with a January 2012 decision of the Cabinet Committee on Economic Affairs to allow privately- owned power companies to import petroleum products on their own.

The Summit Narayanganj Power Plant is the first private company that came up and got clearance from the BPC to import fuel to run its power plant in line with the Cabinet Committee decision, he said.

Currently, the Khulna Power Company Ltd (KPCL) is the only private firm in Bangladesh that has been importing fuel to generate electricity.

The KPCL, also owned by Summit Group, has been importing furnace oil from international market since starting operation of its 110 mw furnace oil-fired power plant in 1998.

It was granted permission to import furnace oil then under a special consideration, he said.

The KPCL is using around 600 tonnes of furnace oil per day to run its power plant, said a company official.

"We have been importing furnace oil for the KPCL for a long time to run our power plants. We shall start importing furnace oil for our Narayanganj power plant soon," Summit Group Chairman Muhammed Aziz Khan said.

He said the firm has been importing furnace oil to ensure quality of the fuel oil and to get better output from the power plants.

The Summit will purchase furnace oil either from spot market or get involved with term deal with a supplier to import the fuel from the international market.

Mr Khan allayed the fear of selling furnace oil in local market saying it was not only against legal bindings but also for the reason that the price of furnace oil is lower in local market compared to the international market as it is subsidised by the government.

The BPC currently supplies to the rest of the country's oil-fired power plants the oil products sourced from international markets by three of its oil marketing units -- the Meghna Petroleum Ltd., the Jamuna Oil Company Ltd. and the Padma Oil Company.

Bangladesh launched a drive to increase oil-based power generation in mid-2010 amid fast-depleting natural gas resources, and targets commissioning of over three dozen new oil-based power plants by the end of 2013.

Currently 35 oil-fired power plants are operational across the country, according to data from the Power Division of the Ministry of Power, Energy and Mineral Resources.

Of the total, 23 with a combined generation capacity of 1,787 MW run on furnace oil and 12 with a capacity of 393 MW on diesel.

The BPC, which had imported a total of around 69,779 tonnes of furnace oil annually in the past decade at a cost of Taka 1.21 billion (US$ 15. 16 million) until mid 2010, is currently importing around 1.0 million metric tonnes of furnace oil to facilitate generation of electricity from the oil-fired power plants, the BPC statistics revealed.

Bangladesh's sole refinery, operated by the BPC subsidiary Eastern Refinery Ltd, has a refining capacity of 1.5 million tonnes per year and remained operative since 1968.

Source: http://feedproxy.google.com/~r/thefinancialexpress-bd/IouH/~3/rkUB_zHVUU0/index.php

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