The nationalised Eastern Lubricants Blenders Ltd will supply Bangladesh's power plants with Royal Dutch Shell brand petroleum products.
The company will soon sign an agreement with Ranks Petroleum Ltd, the country dealer of Shell in this regard.
The Eastern Lubricants board approved the draft agreement in a meeting on Monday afternoon.
Mohiuddin Ahmed, managing director of Eastern Lubricants, told The Business Standard, "Ranks Petroleum will continue to market Shell's petroleum products. Eastern Lubricants will buy Shell's lubricants from Ranks for exclusive supply to power plants."
Mohiuddin added: "A three-year agreement will soon be signed with Ranks. If the business is good, the tenure of the agreement will be extended later."
At present, a large amount of lubricant oil and base oil is being used to generate electricity in Bangladesh.
Statistics from the Bangladesh Power Development Board show that there are currently 146 power plants in the country, and 70 more power plants are in the pipeline.
Currently, 146 power plants produce only 12,000 megawatts of electricity, despite having a capacity of producing 22,000 megawatts. The government has set a target to achieve the capacity of generating 30,000 megawatts of power by 2021.
The nationalised Padma Oil Co. supplies lubricants of Total brand, Meghna Petroleum of Castrol and BP brands, while Jamuna Oil supplies lubricants and base oil of Mobil brand to these power plants.
Eastern Lubricants will soon compete with those brands by supplying power plants with lubricant and base oil from the world's top petroleum producer Shell.
Shell is the world's third highest profit-making company in the oil and gas business. In terms of revenue, the company is at 7th position in the world market.
In 2018, Shell's total revenue was $388 billion and its net profit was $23.90 billion.
Bangladesh Petroleum data shows the sales of lubricants rose by 11 percent in the last five years in the country. In the 2013-14 fiscal year, 17,823 tonnes of lubricants were sold. In the 2017-18 fiscal year, the sales rose to 19,812 tonnes.
In the 2018-19 fiscal year, Eastern Lubricants recommended giving 100 percent in cash dividend to its shareholders. Its record date is December 17. The company will hold its Annual General Meeting (AGM) in Chattogram on February 8 next year.
The company made a net profit of Tk2.33 crore in the 2018-19 fiscal year, and its Earnings per share (EPS) was Tk23.45. In the previous fiscal year, the company's net profit was Tk3.60 crore and the EPS was Tk36.23.
Eastern Lubricants has been giving 100 percent in cash dividend to its shareholders since 2016.
In the first quarter (July-September) of the current fiscal year, Eastern Lubricants' net profit decreased by 31 percent. During the period, the company's net profit was Tk11 lakh and the EPS was Tk1.14. During the same period in the previous fiscal year, the company's net profit was Tk16 lakh and the EPS was Tk1.65.
Eastern Lubricants' paid-up capital is Tk1 crore. Of its total shares, the government holds 51 percent, institutional investors 22.88 percent and general investors 26.12 percent.
On Tuesday, Eastern Lubricant's share price in the Dhaka Stock Exchange increased by 1.96 percent. The company share's closing price was Tk1,156.70 on the day. In the last one year, its share's highest price was Tk1,770 and the lowest price was Tk951.20.