No US objection on Russian oil import

Bangladesh may soon be able to import fuel oil from Russia as it has consulted with the US on restrictions on oil import and made sure that there will not be any objection from the United States in sourcing Russian oil. But there might not be a lower price of oil anytime soon.

Dr Tawfiq-e-Elahi Chowdhury, adviser to the Prime Minister for Power, Energy and Mineral Resources, told the media on Wednesday,

"In my recent visit to the US, I had a conversation with US Under Secretary Jose W Fernandez. I wanted to know if there was any restriction on the import of oil from Russia. He said there is no ban on oil, fertiliser and food by the United States."

"So, we can assume that there is no problem in importing oil from Russia or other countries," he noted.

"We think the US will support us in importing fuel oil," Dr Tawfiq-e-Elahi added at a press briefing at the Prime Minister's Office.

Import of 5 lakh tonnes wheat from Russia greenlighted

Meanwhile, after a gap of six months, caused by the Russia-Ukraine war, Bangladesh is going to resume Russian grain procurement as the Cabinet Committee on Public Purchase on Wednesday greenlighted an import of five lakh tonnes of wheat from Moscow to replenish the country's food reserves.

The process of importing 1.2 lakh tonnes of fertilisers is going on as well.

Russian oil may not solve energy crisis

Discussing the prospect of oil imports from Russia, the adviser to the PM, however, said Russian oil rate has not been learnt yet. So, it cannot be said that the energy crisis will be solved even if Russian oil is imported, he further said.

Due to the ongoing war between Russia and Ukraine, fuel prices have shot up in the global market. As the US-led Western sanctions have reduced its market in the West, Russia is offering discounts on its fuel oil shipments.

China, India, and even the world's second-largest oil producer Saudi Arabia are making the best use of the offer – they are buying cheaper Russian oils to meet domestic demand as well as exporting to Europe at much higher prices after refining.

Russia also offered Bangladesh its crude oil in March and refined oil in last May. 

Last week, Moscow also sent a sample of its crude oil, which is now at a lab for testing.

At the Prime Minister Office's briefing on Wednesday, Md Mahbub Hossain, senior secretary to Energy and Mineral Resources Division, said the next steps for importing Russian oil will be taken based on the test report.  

Officials at the Bangladesh Petroleum Corporation said the process may take a week to get the lab test report of the Russian crude oil.

In the meantime, Rosneft Oil Company, a Russian state-owned company, offered to sell finished oil to Bangladesh as the country does not have the capacity to refine Moscow's crude oil.

'It would have been better to keep fuel prices up'

On 5 August, the Energy and Mineral Resources Division hiked diesel and kerosene prices by 42.5% as well as petrol and octane prices by 51%.

However, the prices were re-adjusted on Monday (29 August) at consumer level in response to the lowering of import duty from 10% to 5% and the withdrawal of all advance taxes on diesel by the National Board of Revenue.

Talking about the price hike and the volatile energy market, Dr Tawfiq-e-Elahi Chowdhury said, "It would have been better to keep fuel prices up. We do not know what will happen next."

"The fuel prices have been reduced by Tk5 per litre, but who knows how long it [the lowered fuel price] will last," he noted.

"The Awami League government is always concerned about the public, which is why fuel prices have been cut by Tk5," he further said.

Asked about the restructuring of taxes and duty before the fuel price hike, the energy adviser said, "If the NBR lifts the duty-tax, the prices of fuel oil will come down. But where will NBR get the revenue? How will development be financed if there is no revenue? It may not be feasible [profitable] to lower prices by reducing duty."

Talking about the possibility of further reduction in the price of fuel oil, Tawfiq-e-Ilahi Chowdhury, said, "No one knows it except God."

Wheat import begins from September

Bangladesh used to import cotton, wheat, corn, mustard, lentils from Russia and Ukraine. Out of the country's total 7 million tonnes of annual wheat demand, around 3.5 million tonnes used to come from Russia and Ukraine.

The country's wheat imports came to a grinding halt following the Russia-Ukraine war in the third week of February.

The Cabinet Committee on Public Purchase on Wednesday, however, approved the import of five lakh tonnes of wheat from Russia on a government-to-government basis as the import payment will be made in the US dollar. The per kg import price of the wheat will be Tk40.85. 

Additional Secretary to the Cabinet Division Md Abdul Barik said wheat import rate will be $430 per tonne as a Russian firm will supply this food grain to Bangladesh. 

The total cost of importing the wheat will be Tk2,042.50 crore, he also said, adding that the grains will start entering Bangladesh in phases from September.

Can Bangladesh get a good oil deal from Russia?

Though India, China and even Saudi Arabia are benefiting from Russian oil on discounted price, Bangladesh could not avail of the opportunity even after Moscow's formal offer for crude in May.

In August, Moscow also offered refined oil and officials are now scrutinising the sample sent by a Russian oil company Rosneft.

Officials cited technical deficiency of the country's lone refinery facility and advance booking with other suppliers were cited for not opting for Russian oil, but there were confusions over possible diplomatic row with the west because of sanctions on Russia.

Prime Minister's Adviser for Private Industry and Investment Salman F Rahman on 27 August said importing Russian oil was still undecided. "There is a sanction on the import of Russian oil, we will not go against it," he said.

The energy adviser's statement yesterday cleared any such confusion for Russian oil now.

Currently, the BPC imports refined fuel from eight countries – Kuwait, Malaysia, the UAE, China, Indonesia, Thailand, Singapore and India.

Meanwhile, Bangladesh finalised a deal for importing Russian wheat while the process began for purchasing fertilisers from Russia and Belarus.  

There were issues regarding payment due to western sanctions on a number of Russian banks and the country's removal from the global transaction network SWIFT.

On August 16, Prime Minister Sheikh Hasina had directed the relevant ministries and departments to figure out a way to import fuel oil from Russia in their own currency.

"If India can import oil from Russia amid US sanctions due to the Russia-Ukraine war, why can't we," the PM was quoted as saying at an Ecnec meeting.

She also instructed the Ministry of Finance and the Bangladesh Bank to take strategies for swapping currencies to import and export from other countries, including Russia.

Things started moving faster after the PM's directives.

Russian experts will visit Bangladesh's refinery shortly to see if the facility could be upgraded to refine Russian crude, Foreign Secretary Masud Bin Momen said after the PM's instruction two weeks ago, noting that Bangladesh may not have any sanction-related problems in importing Russian oil.

There was another concern over confirmation of letters of credit for imports from Russia. This payment uncertainty was also over with 24 global banks agreeing to confirm LCs for imports from Russia, Ukraine and Belarus, Commerce Minister Tipu Munshi said last week.