Oil price hike also to fund BPC’s flats, office block

• BPC's ongoing, upcoming development projects cost Tk33,734cr
• Cost of 11 ongoing projects Tk11,051cr
• Cost of proposed residential-cum-commercial Padma Oil building in Dhaka: Tk378cr

State-run Bangladesh Petroleum Corporation (BPC), the lone fuel importer and distributor in the country, is constructing three residential and office buildings in Dhaka and Chattogram at a total cost of Tk317 crore.

The corporation has also proposed constructing a 12-storey modern residential cum commercial building, featuring two basements, for Padma Oil Limited at Paribagh in the capital's Shahbagh area, which would cost around Tk378 crore.

The energy division has claimed if fuel prices were not hiked and the BPC incurred losses for a long time, the implementation of the ongoing development projects would become uncertain, putting the country's energy security at stake.

To ensure financing of the ongoing and upcoming projects of the BPC, the Energy and Mineral Resources Division has recently hiked the prices of diesel and kerosene by 23% that has hit the people, even more so the low-income ones, hard by making essential commodities costlier.

The Planning Division and energy experts, however, have disagreed with the energy division's statement. According to them, these projects are unlikely to ensure energy security.

"These are flamboyant and luxury projects. These projects are not related to energy security in any way," Ghulam Rahman, former chairman of the Bangladesh Energy Regulatory Commission (BERC) and president of the Consumer Association of Bangladesh (CAB), told The Business Standard.

Besides experts, relevant state authorities also have questioned the acceptance of such projects as already a project is underway in Chattogram for building Padma Oil's head office.

The Planning Commission said as the head office and the main infrastructure of Padma Oil are located in Chattogram, constructing a liaison office in a prime area like Paribag appears to be unnecessary.

"The feasibility study found the possibility of a commercial space in Paribagh. A company that mainly trades in fuel oil and petroleum would not operate a commercial building," it said.

The commission also proposed doing a complete feasibility study highlighting the adverse effects of constructing a commercial building in densely populated areas such as Paribagh on the traffic, financial, social and environment.

The adverse impacts on the movement of patients and attendants need to be highlighted in the study, the commission further recommended.

Paribagh is an adjacent area to Shahbagh, a hub of high class medical facilities and thousands of patients and their attendants pass through Paribagh daily on their way to the hospitals.

Other than the two projects for Padma Oil, the BPC is currently implementing two "building" projects – a Tk154.18 crore project for Jamuna Oil Company in the capital's Karwan Bazar and a Tk61.77 crore project for Meghna Petroleum Limited in Chattogram.

Does BPC have Tk33,734 crore projects?

In its post-fuel price hike statement, the energy division says the BPC has taken different development projects involving an estimated cost of Tk33,734 crore to ensure energy security of the country.

A TBS investigation, however, has found that the BPC has 11 ongoing projects including the proposed residential building at Paribagh, the estimated total cost of which is Tk11,051 crore.

What does BPC say?

BPC Chairman ABM Azad told TBS that the figure was estimated considering the ongoing and upcoming projects.

"The estimated cost of the Eastern Refinery unit-2 project would be around Tk20,000 crore, which is under planning. So, there should not be any confusion about the figure."

ABM Azad further said these projects are financed and implemented by distribution companies.

"Not all of these projects are financed by the corporation. As we are the umbrella-body of these companies, these projects are shown as our projects."

Explaining why these projects are essential for ensuring the country's energy security, some officials at the BPC, however, said none of the distribution companies and the BPC itself have their office buildings and that all of the companies are now conducting their operations from rented buildings.

Once implemented, the ongoing and upcoming projects would ensure smooth operations of the companies, ensure a modern and safe working environment for the officials, and increase the revenue of the companies through the renting out of surplus spaces.

Energy expert Professor Shamsul Alam said raising fuel prices for financing projects that are still under planning is unjustified.

"We (consumer organisations) have asked the BPC to submit their financial statement to us. Once we get the statement, we will take the necessary action against the latest fuel price hike."