Summit wants to sell surplus govt oil in open market
The company sent a letter to the BPDB seeking its permission to sell 28,000 tonnes of diesel from the company’s plant inventory, in the open market
The Summit Meghnaghat Power Company wants to sell from its stock of diesel fuel worth Tk200 crore which the government provided it for power generation.
The company in late July this year sent a letter to the Bangladesh Power Development Board (BPDB) seeking its permission to sell 28,000 tonnes of diesel from the company’s plant inventory, in the open market.
In the letter, it claimed to have a “right” to sell the oil as it accumulated this stock gradually by using energy-efficient machinery, proper operation and maintenance, since beginning operation in 2014.
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In response to the Summit’s proposal, the BPDB said the power company has no right to do so, as the state paid the price of the oil for the plant.
“The oil, whatever amount may be in their stock, is ours. Summit has no scope to sell the fuel to anybody. We will use this fuel in other power plants,” said BPDB Chairman Khaled Mahmood.
Equipped with dual fuel (either gas or diesel) 305 megawatt combined cycle power generation system, the plant had been using imported diesel supplied by the BPDB, until March this year.
The letter said the Meghnaghat power plant, since 2014, had consumed 810,960 tonnes of diesel until March 2019, against the set requirement of 839,638 tonnes.
By that count, 28,678 tonnes of oil have remained unused in the plant.
The plant went into partial operation in 2014 and full operation the next year when there was an acute shortfall in gas supply in the country.
But in March this year, it switched to gas-based power generation as the government started importing Liquefied Natural Gas (LNG) from April 2018 to optimise the country’s natural gas supply system.
The plant no longer needs diesel to operate and hence the demand for selling the surplus.
Power Division sources however said, at the beginning of a financial year, the BPDB sets fuel requirements for different power plants and conveys it to the state-owned Bangladesh Petroleum Corporation(BPC), the only government entity responsible to import and supply fuel to them.
As per BPDB demand, the BPC imports the required volume of oil and supplies it to those plants.
The BPDB pays the price of fuel as per the Power Purchase Agreement (PPA) and Fuel Supply Agreement (FSA).
As a result, the oil the Meghnaghat plant has in its stock is owned by the government, added the sources.
A Summit Power International spokesperson confirmed that the company has submitted an application to the BPDB but cannot make any further comments.
People related to the sector, however, expressed concerns that if the private company is given permission to sell the oil, it might have a negative impact on the whole market.
If the practice begins in the country, other investors might also seek permission later for the same, which would be disastrous for the energy sector.
