Govt mulls withdrawing ban on errant refineries

The government actively considers withdrawing a ban it had imposed last year on the operation of six private refineries for supplying natural gas condensate to petrol pumps illegally.
Natural-gas condensate is a low-density mixture of hydrocarbon liquids present as gaseous components in the raw natural gas extracted from gas fields. Use of condensate as fuel causes damage to motor engines.
An energy division meeting on February 22 decided to find out ways to resume supplies of natural-gas condensate to six private refineries from gas fields and to buy the petroleum products from the refineries, officials have said.
The meeting was held with power, energy and mineral resources minister Nasrul Hamid in chair to review a government decision suspending the supplies of condensate to the refineries as they were accused of selling it directly to the petrol pumps to make money.
The meeting also asked Petrobangla, the state-run Oil, Gas and Mineral Resources Corporation, and the state-run Bangladesh Petroleum Corporation to develop a mechanism so that such malpractice in marketing of adulterated petroleum products could be checked, the officials said.
Officials familiar with the issue warned that the malpractice could only be stopped by stopping business by the ‘culprits.’
Petrobangla supplies the condensate to 20 refineries — seven in public sector and 13 in private sector — for producing petroleum products which are marketed by the subsidiaries of the petroleum corporation.
After mismatch between the quantum of supplies of refined petroleum products — petrol, octane and diesel — to the petroleum corporation and the quantum of supplies of condensate to the refineries came to notice, the energy division decided to suspend the supplies of condensate to the six refineries that led to the suspension of their operations, they said.
They said that syndicates of private refiners and petrol pump owners bagged several hundred crores of money selling petroleum products adulterated with cheap condensate.
Petrobangla sells condensate at Tk 44 per litre to the refineries.
But investigation carried out by the energy division and the petroleum corporation in early 2016 found that some private refiners earned up to Tk 26 in profit by selling each litre of condensate directly to some petrol pumps at Tk 70 and enabled the pump owners to earn up to Tk 19 by mixing the condensate with refined products such as petrol and octane.
Legal business operation, however, allows a refiner to have a margin of Tk 7 for refining each litre of condensate while a petrol pump owner Tk 3.7 for selling each litre of petrol or octane.
Officials of energy division and petroleum corporation said that the malpractice in refining condensate and sales of petroleum products adulterated with condensate deprived the corporation of revenue earning as its sales were dropped significantly.
At the same time, they said, the economic life of the vehicles using the adulterated petroleum products was shortened.
In a bid to prevent the marketing of adulterated petroleum products, Petrobangla between July and October of the past year either suspended the condensate supplies to or did not renew the contract for the condensate supplies with the refineries, according to the working paper prepared for the February 22 meeting.
In 2016, Petrobangla stopped supplies of condensate to Chowdhury Refinery Limited on August 23, to Lark Petroleum Company Limited on July 25, to CVO Petrochemical Refinery Limited on July 17 and to Golden Condensate Oil Refinery Factory Limited on July 16. Petrobangla also did not renew the contracts of condensate supplies with Synthetic Resin Products (Pvt) Limited after expiry of the contract on August 17 and with JB Refinery Limited after expiry of the contract on October 18.
The decision pushed up sales of petrol and octane by the petroleum corporation significantly, said the officials.

Source: New Age