August 22, 2010
The Iranian government would bankroll the cash-starved state-owned Eastern Refinery Limited (ERL) of Bangladesh for upgrading its crude oil refinery capacity three folds that would require investment worth nearly $1 billion, officials said.
Bangladeshi finance ministry officials said the Iranian government in a recent letter said it is interested to finance modernization project of the highly profitable ERL as Bangladesh needs to boost its oil refining capacity to meet growing fuel demand.
“The Iranian government has sought some documents like feasibility study, technical and market evaluation reports for evaluating commercial viability of the project,” a senior economic relations division (ERD) official stated.
The age-old ERL, the sole state-owned petroleum refinery under the Bangladesh Petroleum Corporation (BPC), has the capacity to refine 1.5 million tons of fuel oil only, although the country has now demand for over 3.8 million tons of oil per year.
BPC looks forward to meeting the growing fuel and petroleum products’ demand in the country that will increase to 6.6 million tons by 2015, a BPC official said.
Based on the feasibility study by a Pakistani firm, the state-owned fuel oil refinery has undertaken a Tk 65.77 billion ($940 million) ERL renovation project in a bid to raise the crude refining capacity.
The state-owned oil refinery has invited investments in formats like build-own-operate-transfer (BOOT), public-private partnership (PPP), finance-only or any other suitable option.
The ERD official said, “about a month ago we sent letters to different Middle Eastern donors seeking funds for the ERL upgradation project due to shortage of government funds for investment.”
“Iran’s petroleum ministry has recently given positive a response. Now we need to have talks with the Iranian government for getting confirmation of the loan amount and its terms and conditions,” he added.
A BPC official said: “We’ve a plan to enhance the ERL’s capacity three-fold by December 2012. If the fund is confirmed soon, we will start the renovation work from late this year.”
He said after ERL’s capacity expansion, it would purify medium heavy crude, which is $3-$4 cheaper than per barrel lighter crude cost on the international market.
Prices of crude and refined oil in the international market vary at the range of $7 to $10 per barrel.
(Source: Financial Express Bangladesh)