The Bangladesh Petroleum Corporation's (BPC) initiative to store additional diesel fuel at private facilities by capitalising on the historic price fall in the global oil market has yet to witness any success.
The state-owned lone oil importer says the private company concerned could not complete the required preparations to store the oil. But, that company claims they are on standby after finishing all preparations, but the BPC is yet to show any interest in the matter.
Furthermore, oil price on the international market has started to recover again as many countries has begun to cope with the new-normal situation due to the Covid-19 pandemic.
It seems Bangladesh has lost the opportunity to save a large amount of import expenditure because of its slow response and reluctant attitude.
On April 20, when the international oil market saw its worst day as US crude oil price dropped below zero, many nations, including China and India, took advantage of low prices by buying large amounts of crude oil to replenish their Strategic Petroleum Reserve (SPR).
Our neighboring country India stored 32 million tonnes of oil in their SPR, which gives the country a relief worth Rs5000 crore, reports Hindustan Times.
Bangladesh also decided to hoard oil in a bid to take advantage of the situation.
With the nod from government high-ups, the BPC started to look for storage, and on April 21, it contacted a private company named the United Group to store additional diesel.
The BPC was supposed to store 80,000 tonnes of diesel at the United Group's storage facilities both in Chittagong and Mongla.
However, it could not hoard the additional fuel in that private facility in the last two months and the opportunity to buy oil at a cheaper rate is starting to slip away.
As a refined product, the price of per-barrel diesel oil was $17.67 on April 23, which has already climbed to $46.39, according to the Platts pricing.
In 2018-2019, the BPC spent Tk30,738crore for importing different types of petroleum fuel and of the total expenditure, Tk23,376 crore was spent for importing diesel oil.
When asked, BPC's Director (Operation and Planning) Syed Mehdi Hasan said, "We are still in the process but could not store the fuel as yet, because the private operator concerned does not have port approval for bathing oil carrying vessels."
However, the United Group claimed that getting a bathing approval is not a big deal, and oil can be imported during the approval process.
"Besides, after making all the preparations, we applied for the approval too and we can get it within two or three days. But, the BPC has not reached out to us with any formal contract to store the fuel," said Nasiruddin Rashid, director of the United Group.
"We are not sure whether the corporation is going to store diesel at our facilities or not," he added.
Meanwhile, a source at the BPC has informed The Business Standard that the corporation is not keen to import additional oil for different reasons, including a low demand of fuel in the domestic market due to the Covid-19 impact.
Generally, the country has a daily demand of 18,000 tonnes of petroleum products including diesel, Jet fuel, petrol, octane and furnace oil.
But, currently the daily demand has dropped to 9,000 tonnes due to slowdown in businesses.
Another reason is that the government's storage system allows storing 13 lakh tonnes of oil. Due to the sharp drop in domestic consumption and continuous import, the BPC has enough oil storage which was imported before the wake of Covid-19 outbreak.