BPC seeks high-sulphur diesel import to cut petroleum bills

• BPC for raising the sulphur bar to 500ppm from current 350ppm
• More sulphur in diesel makes the fuel dirtier, but cheaper
• The corporation expects to save around Tk600cr in diesel bill a year
• Activists claim the move will misfire and worsen the air quality further

The Bangladesh Petroleum Corporation (BPC), the lone state-owned fuel oil importer, wants to ship in higher sulphur-mixed diesel to cut the country's petroleum bills amid the ongoing dollar crunch.

According to a top official at the BPC, the corporation is considering importing diesel with a sulphur content of above 500 parts per million (ppm), instead of the current 50ppm, in an effort to save $3 per barrel on imports.

The move is expected to save around Tk600 crore – excluding VAT and import duties – in the current calendar year if half of the total diesel demand is imported with the higher sulphur content, he told The Business Standard on condition of anonymity.

The BPC has reached out to the Ministry of Industries to request a relaxation of the Bangladesh Standard and Testing Institute (BSTI) benchmark for sulphur in diesel – which is 350ppm, with a meeting set to take place on Thursday with sector specialists to discuss the matter.

However, the move has sparked concern among energy experts and environmentalists, who argue that the initiative would result in further pollution of the air and environment.

They also argue that the BPC should adjust diesel, octane and kerosene prices at the retail level, instead of shipping in the dirty diesel to save on import bills.

Currently, the BPC imports diesel with a sulphur content of up to 50ppm.

In general, diesel with lower levels of sulphur is more environmentally friendly, but comes at a higher cost compared to diesel with higher sulphur content.

At present, the price of diesel with 50ppm sulphur is around $101.02 per barrel whereas the diesel with 500ppm costs only $98 per barrel.

Generally, the BPC imports around 15 to 16 cargoes every month each with around 30,000 tonnes or around 2.5 lakh barrel capacity. For the running calendar year, the BPC has projected the country will have a demand of around 48.30 lakh of diesel.

On Wednesday, the cabinet committee on public purchase approved the procurement of 20.40 lakh tonnes of refined petroleum for the first six months of 2023.

The BPC official has stated that if half of this demand is met through the higher content of sulphur, Bangladesh will be able to save around Tk600 crore, which can be used to import essential goods during this economic downturn.

Tapan Kumar Saha, president of BSTI's petroleum committee and also a chemistry professor of Jahangirnagar University, said the BSTI set the sulphur standards in diesel by considering various factors including international best practices.

Saha stated that the lower the presence of sulphur in diesel, the better it is for the environment, vehicles and industry. Developed countries such as Japan and the United States use diesel with 10-15ppm sulphur.

"However, there will be further discussion Thursday, taking into account the current economic crisis and cheaper import options," he told The Business Standard on Wednesday.

Environmentalist Syeda Rizwana Hasan emphasised that Bangladesh's air cannot afford any more pollutants, as it is already the worst in the world and causes around 200,000 deaths per year.

She urged the authorities to abandon the proposal.

Zakia Sultana, secretary of the Ministry of Industries, told The Business Standard that they have received the proposal but no decision has been taken yet.

"As it is a technical matter, a meeting with experts and stakeholders is being held on Thursday to evaluate the proposal," she added.