S Alam dropped from Eastern Refinery unit-2 project
The interim government has rejected S Alam Group's investment proposal for constructing a second unit for Eastern Refinery Limited (ERL), the country's sole state-run fuel oil refinery.
The recently ousted Hasina government had initially selected S Alam Group for the project's implementation through a public-private partnership (PPP) modality.
According to a press release issued by the Ministry of Power, Energy and Mineral Resources today, the proposal involving the Bangladesh Petroleum Corporation (BPC), Eastern Refinery Limited and S Alam Group has been scrapped.
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The government also decided to send a letter to the BPC to prepare a new Development Project Proposal (DPP) reflecting current foreign exchange rates.
Once finalised, this revised DPP will be submitted to the Planning Commission for review and subsequent procurement planning in alignment with the Public Procurement Rules (PPR) 2008, says the release.
According to ministry sources, S Alam Group wanted to take 51% ownership in the project but it was not agreed upon. The BPC favoured keeping 60% ownership in the hands of the government.
Later, it was decided that a memorandum of understanding (MoU) would be signed rather than finalising the partnership. The draft MoU was sent to the law ministry in July.
However, the situation changed after the fall of the Awami League government.
Operated under the BPC, Eastern Refinery Limited (ERL) is the only fuel oil refinery in the country. Established in Patenga, Chattogram in 1968, it can refine around 15 lakh tonnes of crude oil annually against the country's current petroleum demand of around 65-70 lakh tonnes.
The government has been trying to increase Eastern Refinery's capacity since 2012 to lessen reliance on imported fuel oil. In FY24, BPC imported approximately 49 lakh tonnes of refined fuel oil and over 13 lakh tonnes of crude oil.
According to sources, ERL unit-2 is projected to have an annual refining capacity of 30 lakh tonnes and the capability to refine various types of crude fuel oil. The estimated cost of implementing this project is Tk25,000 crore.
