Northern region to have steady oil supply as cross-border pipeline nearing completion

Highlights:

• The 131km pipeline from Siliguri, West Bengal to Parbatipur, Dinajpur will go into operation in December 2022
• It will reduce fuel transportation time
• Currently, BPC spends $8 per barrel on imports; the cost will drop to $5.5 per barrel if it comes through the pipeline 

The country's northern region grappled with a fuel crisis during the nine-day long Eid-ul-Fitr holiday as the workforce tasked with carrying oil to the northern districts were enjoying Eid vacations too.

Bangladesh Petroleum Corporation (BPC), the state-owned fuel oil importer, claimed that there was no such fuel shortage at the time, but people involved in the sector said the northern districts suffer from such crises frequently because delivery of fuel from Chattogram port to Dinajpur, Rajshahi and Rangpur takes a long time.

A cross-border oil pipeline between India and Bangladesh will remedy the problem by ensuring uninterrupted fuel oil supply to 16 districts of Rangpur and Rajshahi divisions in shorter time and in a cost-effective manner.

Khalid Ahmed, director (operation and planning) of BPC, told The Business Standard, "The work to lay down the pipeline is almost completed. We hope to start carrying oil from India by December this year." 

The 131.57 km long pipeline project connects Siliguri, West Bengal, and Parbatipur, Dinajpur. Of the construction cost amounting to Tk520 crore, the Indian government is providing Tk303 crore and the BPC is providing the remaining Tk217 crore. 

Of the total length of the pipeline, 126.50 km is inside Bangladesh while the remaining 5.07 km is in India.

As of 30 April this year, around 125 km of pipeline under the India-Bangladesh Friendship Pipeline project has already been installed. Only the installation of pipelines through some small rivers and rail line crossings remains, said BPC sources.

The materials needed for the pipeline were shipped in February 2020 with the aim of completing the project by June 2022.  But the Covid-19 outbreak delayed the project for six months and the pipeline installation work started on 3 December 2020.

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 in by trains from India as well.

The BPC faces problems sending the fuel from Chattogram to Dinajpur through roads and railways, especially when natural calamities occur and political tensions rise. 

Sources at the BPC said usually it takes 48 hours 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 sources at the BPC.

Direct oil pipeline to save cost

Sources at the BPC said currently it spends around $8 to import and supply each barrel of oil. 

The cost includes expenses of importing oil by ship from the Middle East to the outer anchorage of Chattogram port, and delivering it to Dinajpur from there.

The cost of importing oil through the cross-border pipeline will come down to $5.5 per barrel once the project is operational, said BPC officials. 

How much fuel oil is needed for the northern region? 

In FY21, the eight divisions in the country together used 6.3 million tonnes of oil, of which, 1.2 million tonnes were used in Rajshahi and Rangpur.

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. 

Part of the northern region's total fuel demand is being met with diesel imported from India to Parbatipur depot through railways, which is around 0.45 million tonnes annually.

The rest is delivered through roads and railways, which is 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 north-eastern regions, including Sunamganj and Sylhet.

[This article has been prepared as part of a BEI media fellowship with support of SARI/El Project Secretariat under IRADe and USAID.]