Padma Oil to sell land for setting up second Eastern Refinery unit

The state-owned Padma Oil Company Limited has decided to sell its land in Chattogram to the Bangladesh Petroleum Corporation (BPC) in order to set up the second unit of its sister concern Eastern Refinery Limited.

Padma Oil disclosed this as price sensitive information on the Dhaka Stock Exchange (DSE) website on Monday. The land's size is 11.6 acres, and its sale value is yet to be announced. 

Both Padma Oil and Eastern Refinery are owned by the BPC. 

Padma Oil's Company Secretary Numan Ahmed Taffader told The Business Standard, "To determine the land price, a committee consisting people from BPC, Padma Oil, Eastern Refinery, and the Ministry of Power, Energy and Mineral Resources will be formed."

"As per rules, the committee will determine the land's price at the highest Mouza rate."

"We will sell the land to our owner BPC, which will then transfer the land to Eastern Refinery. Padma Oil will not acquire any stake in the refinery," he added. 

To implement this land sale, Padma Oil has to secure shareholders' approval through annual or extraordinary general meetings. The company is yet to fix a date for a meeting. 

Eastern Refinery Unit-2

The government is going to build unit-2 of Eastern Refinery, at an estimated cost of Tk23,746 crore. The project is expected to be implemented within June 2027. 

The finance ministry will contribute Tk16,142 crore in loans, while the implementing agency, BPC, will provide the remaining Tk7,100 crore. 

According to a BPC official, unit-2 will be set up using state-of-the-art technology to refine various types of crude oil, including Russian crude oil.

Once the project is implemented, Bangladesh will be able to import and refine an additional three million tonnes of eco-friendly Euro 5 fuel oil per year, saving $9-10 per barrel in refined fuel considering current international market prices.
Financial status of Padma Oil

In the first nine months of the fiscal 2022-23, the company handled fuel oil of around 20 lakh tonnes, which was 11% higher compared to the same period previous year.

It earned Tk197 crore by handling the fuel during the period.

At the end of March this year, its net profit grew 33% year-on-year to Tk220 crore.

Its shares were traded at the floor price of Tk209.2 each at the DSE.

Padma Oil stores and sells fuel on behalf of BPC. In return, the company receives a charge from the BPC. Besides, the company earns from fixed deposits. Currently, BPC sells the most fuel through Padma Oil.