In a significant financial move, Bangladesh Petroleum Corporation (BPC) has successfully reduced the premium cost on fuel imports under government-to-government (G2G) agreements, resulting in a $42 million (Tk42 crore) saving for the state.
This adjustment, made for the fuel imported between July and December, was achieved through negotiations to align G2G costs closer to open tender rates, a shift that BPC anticipates will bring further cost reductions in the future.
Since joining BPC as chairman, Mohammad Amin Ul Ahsan has implemented cost-saving strategies, identifying that premiums on G2G-sourced fuel were consistently higher by $2 to $2.50 per barrel compared to open market tenders.
In response, BPC initiated discussions with suppliers, advocating for premium costs to be at least marginally lower than open tender rates, given the reduced complexities inherent in G2G agreements.
During recent negotiations, BPC presented references to the tendered rates, persuading suppliers to lower the premium costs accordingly.
Chairman Amin Ul Ahsan has expressed optimism that competitive pricing on G2G contracts will be enhanced even further in the near future.
Suppliers initially resisted the reduction, citing past delays in receiving payments, which they claimed had resulted in losses.
However, BPC has since cleared any outstanding dues, which at one point had amounted to $200 million, and addressed supplier concerns over timely payments.
The cost-saving initiatives have also bolstered progress on BPC's essential projects.
Among these is the long-delayed Dhaka-Chattogram pipeline, which is slated for inauguration in January.
Initially proposed in 2017, the 237-kilometre Dhaka-Chattogram pipeline project, alongside 59 kilometres from Cumilla to Chandpur and an 8.5-kilometre stretch from Fatullah to Godnail depot, had faced numerous delays.
BPC anticipates the pipeline’s operation will yield Tk65 crore annually in transport savings and reduce logistical losses.
This project, although overlooked by previous chairpersons, has now been prioritised under Amin Ul Ahsan’s leadership.
Fuel consumption reached record levels in the 2022-23 fiscal year, with 7.35 million metric tonnes consumed across Bangladesh.
Diesel led the demand, totalling 4.93 million metric tonnes, followed by furnace oil at 880,000 tonnes. Demand, however, declined to 6.36 million metric tonnes in 2023-24.
To meet these needs, BPC imports 50% of its refined fuel through long-term G2G agreements, with the remainder sourced via international tenders.
Local supply remains constrained, with Eastern Refinery Limited (ERL) providing only 1.54 million metric tonnes per year, leaving Bangladesh reliant on higher-priced refined imports.
To reduce import dependency, BPC launched the ERL-2 project in 2008, intended to save Tk5 to 6 per litre by refining crude oil locally.
However, bureaucratic delays have pushed the project back over a decade.
Originally budgeted at Tk13,000 crore, the ERL-2 project’s revised budget now stands at Tk23,736 crore, with a target production capacity of 3 million metric tonnes.
Chairman Amin Ul Ahsan affirmed that implementation of the ERL-2 project has been accelerated, with visible progress expected soon.
In tandem with these efforts, BPC has undertaken several bold measures to address internal issues.
Key among these actions is the transfer of several long-standing officials, some of whom had held the same positions for two decades despite facing allegations of corruption.
These decisive moves have sent a message to discourage corruption and consolidate integrity within the corporation.
