TDS Desk:

The government is moving to create a framework for private companies to import and market refined petroleum products shortly after Bashundhara Group’s proposal in this regard.

In a letter dated August 6, the Energy and Mineral Resources Division has instructed the Bangladesh Petroleum Corporation (BPC) to prepare a draft “Private-Sector Refined Fuel Import, Storage, Transportation, Distribution and Marketing Policy, 2026” by August 10.

The move could eventually allow private companies to participate in a market where the state-run BPC currently plays the central role in importing petroleum products. BPC’s three subsidiaries, Padma Oil Company, Jamuna Oil Company and Meghna Petroleum, handle distribution and marketing.

The initiative comes after Bashundhara Oil and Gas Company Ltd and Anvir Bashundhara Group on May 24 sought permission from the energy ministry to directly import and market large quantities of refined fuel.

The company sought permission to import 15-20 lakh tonnes of diesel, 2 lakh tonnes of octane, 1.5 lakh tonnes of petrol and 8-10 lakh tonnes of furnace oil annually. That would amount to as much as 33.5 lakh tonnes of refined fuel a year.

Bangladesh’s annual fuel oil demand is about 74 lakh tonnes, according to BPC data. In fiscal 2024-25, BPC imported 46.1 lakh tonnes of refined petroleum products.

The proposed volumes would represent a sizeable private sector entry into a market that BPC currently supplies largely through imports and domestic refining. The proposal comes as the government is already signalling a broader shift towards private participation in the energy sector.

At a programme on July 22, Energy Minister Iqbal Hassan Mahmood Tuku said the government was planning to allow private companies to import petroleum products in an effort to reduce the subsidy burden.

Three other private entities had earlier expressed interest in having larger roles in oil refining, but none sought to import refined fuel, has learnt from officials familiar with the proceedings.

Several private companies operate small-scale refineries in Bangladesh, but these facilities have traditionally processed locally sourced condensate rather than imported crude.

Bashundhara wants to import the products under its own management and sell and market them through its own arrangements as well as through the government’s oil marketing companies.

It also says it has approval for 388 filling stations and sought permission to establish those stations and convert LPG/autogas stations into modern fuel stations.

Bashundhara’s latest proposal is also materially different from the company’s earlier initiative involving petroleum products.

In 2024, Bashundhara obtained permission related to importing crude, refining it, and marketing the products.

Its latest application seeks permission to import refined petroleum products directly and market them in Bangladesh.

The energy division sought the BPC’s opinion on Bashundhara’s application in a letter dated July 11.

The BPC subsequently formed an 11-member committee, including its senior officials and the managing directors of Padma, Meghna and Jamuna, on July 14.

The committee was asked to examine the legal basis of the proposal, the import quantities, the marketing arrangements, and the possible impact on BPC and Padma, Meghna, and Jamuna oil companies.

It was also asked to assess the proposal from the perspectives of fuel security, supply diversification, and the development of a competitive market.

The committee was given only two working days to submit its recommendations.

The BPC subsequently sent its response to the energy division on July 21, “objecting to the proposal” while noting that the ultimate decision rested with the government, a BPC official said, requesting not to be named.

However, on August 6, the energy division instructed the BPC to prepare a draft policy by tomorrow.

Tuku yesterday told that they want private companies to import refined petroleum products alongside the BPC to introduce competition and reduce the possibility of the state being held hostage by a single buyer or supplier.

He said, “We want private companies to bring [fuel] alongside us so that there is fair competition… We want to get out of the monopoly.”

Tuku said the initiative was not intended to benefit any particular company and that the government had received applications from several firms.

The minister said the proposed framework was still at an early stage and had not received approval from the government’s economic affairs committee or the cabinet.

He said the proposal would first be examined to determine whether it was feasible.

The energy division yesterday issued a statement defending the proposed policy after receiving flak from a section of the media and the opposition party.

It said the framework would seek to establish a transparent and competitive system and allow private-sector infrastructure and investment capacity to complement the existing government system, particularly during emergencies or crises.

It said the policy would only be considered if public interest, energy security, competition, transparency and accountability could be ensured. “There is no scope to provide special benefits to any particular individual, organisation or group through this policy.”

M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh, criticised the fast-paced process.

“The BPC was initially given two days to provide its opinion on the private company’s proposal and was subsequently asked to prepare a broader guideline within four days.

“We have seen in the past how vested groups can have their interests secured at lightning speed.”

Major changes in a key sector such as energy require proper assessment, consultation, and institutional scrutiny, rather than being hurried through within days.

Referring to the government’s rationale that greater private sector participation would reduce the subsidy burden, Shamsul said, “This is not a realistic or evidence-based argument. Private operators would seek to maximise profits, which could ultimately increase costs and consumer prices rather than reduce them.”

He also questioned whether Bangladesh’s regulatory institutions have the capacity to effectively oversee private companies operating in such a strategically important sector.

“You cannot hand over a sector to private hands simply by relying on regulation,” he said, arguing that an effective regulatory framework and competent institutions would have to be in place first.

Weak state oversight can allow irregularities to occur at the hands of the government or private companies. Courtesy: The Daily Star