New pipeline will ensure better fuel flow to northern consumers, boost BPC ability

The India-Bangladesh Friendship Pipeline, a cross-border pipeline that was inaugurated on Saturday, is going to be a big relief for consumers in the northern part of the country. The Bangladesh Petroleum Corporation (BPC) will also get a boost in its ability to supply uninterrupted fuel in the region.

Prime Minister Sheikh Hasina inaugurated the pipeline jointly with her Indian counterpart Narendro Modi and said that the pipeline will reduce time and cost of diesel imports. It will also help ensure energy security.

The state-owned BPC is expected to save $6 per barrel on diesel transported from India through the newly inaugurated cross-border energy pipeline which is seen to be a boon during this time. 

Steady flow of fuel

While consumers in sixteen northern districts of Bangladesh will not see a decrease in diesel prices, the pipeline will guarantee that they have sufficient access to diesel for irrigation during the critical period of sowing season.

Until now, fuel oils such as diesel were transported from Chattogram port to the northern region via Mongla port, costing  both time and money.

The two neighbouring countries of South Asia have launched their first-ever cross-border energy pipeline, providing Bangladesh with much-needed access to fuel during a time of global supply chain disruption and rising commodity prices, including energy products, due to the Russia-Ukraine war.

The 131.57-km pipeline project connects Siliguri in West Bengal and Parbatipur in Dinajpur. Of the total length of the pipeline, 126.50km is inside Bangladesh while the remaining 5.07km is in India. The construction cost of the part of the pipeline on the Bangladesh side is Tk306 crore.

Infographic: TBS

Speaking about the potential outcome of the pipeline, BPC Chairman ABM Azad said, "It will enable us to supply required fuel oil in the northern region within two days, instead of 12 days that the existing supply system takes."

Asked about how the cross-border pipeline will benefit consumers, the BPC chairman told TBS that it is too early to comment on this as Bangladesh is going to import only around two lakh tonnes of diesel through this pipeline per annum which is a small share of the country's total diesel demand of around 50 lakh tonnes.

"And we cannot provide benefits for a specific part of the country. Instead, if there is any benefit that will be ensured for all consumers across the country," he further stated.

In fiscal year 2020-21, the BPC spent around Tk39,996.18 crore to import around 65.91 million tonnes of crude and refined oil, according to the BPC data.

Meanwhile, energy experts and stakeholders claimed that this project will help BPC see more profit.

Dr Mohammad Tamim, a professor at the Bangladesh University of Engineering and Technology, said that the India-Bangladesh pipeline project is a good initiative for Bangladesh in terms of quick supply, lower cost of transportation, and alternative sources of fuel.

"However, it will net more profit to BPC's pocket as the transportation cost is set to be reduced. Consumers will not get the benefit until the government reduces the fuel price," he said.

A time-saving project

Currently, 16 northern districts get fuel supply from the oil depot in Parbatipur, which normally gets its supply through the Khulna-Baghabari rail line. Sometimes, oil is brought by rail from India as well.

The BPC faces problems sending the fuel from Chattogram to Dinajpur through roads and railways, during natural calamities and political crises. 

Sources at the BPC said usually it takes a few days to send oil tankers from Chattogram to the northern region through waterways. 

Rail routes take a shorter time than waterways, but the BPC cannot use the full capacity of the train carriages due to weaker railway tracks in the eastern region. 

To deliver the required amount of oil to the northern region, the BPC needs to carry it first from the Chattogram to Mongla port. From there it is carried to Parbatipur through a broad gauge rail line.

The direct cross-border pipeline will carry fuel oil to Parbatipur without any of the hassle currently experienced, said the BPC chairman.
 
How much fuel oil is needed for the northern region?

In FY21, the BPC marketed around 6.3 million tonnes of oil in the eight divisions of the country, of which, 1.2 million tonnes were consumed by users in the Rajshahi and Rangpur divisions.

Generally, diesel is the most consumed fuel in the country. It is used in irrigation, transport (trains, vessels, and road vehicles), and industries to produce electricity.

A part of the northern region's total fuel demand is being met with diesel imported from India to the Parbatipur depot through railways, which is around 0.85 million tonnes annually. The rest is delivered through roads and railways, a costly and time-consuming process.

The cross-border pipeline will be able to deliver one million tonnes of fuel annually once it comes into operation.

Apart from uninterrupted, cheaper, and quicker energy supply security, the cross-border pipeline is expected to help BPC reduce the system loss that it incurs in the form of pilferage.

BPC officials have expressed the hope that the pipeline will also help ease the oil supply in the northeastern regions, including Sunamganj and Sylhet.