BPC warns risks over oil bid of Bashundhara
Opening Bangladesh’s refined petroleum market to private companies could weaken the country’s energy security and create significant risks for consumers and the economy, including revenue losses, artificial shortages, fuel hoarding, price volatility and the circulation of substandard products, a Bangladesh Petroleum Corporation (BPC) committee has warned.
The committee said fuel should not be treated as an ordinary consumer product because uninterrupted supplies are essential for transport, power generation, industry and agriculture.
Allowing private firms to directly import and market refined petroleum products could therefore have wider economic and strategic consequences, it said.
The nine-page report was prepared after Bashundhara Oil and Gas Company (BOGCL) applied on 24 May to import refined petroleum products directly.
The Energy and Mineral Resources Division formed an 11-member committee on 14 July, headed by AK Mohammad Shamsul Ahsan, BPC director (operations), to examine the proposal.
The committee submitted its report on 19 July, recommending against direct private imports and describing fuel as a strategic product closely linked to national stability and energy security.
Seven days after the report was submitted, BPC Chairman Md Rezanur Rahman was removed from his post and made an officer on special duty.
The development was followed by a directive from the Energy Division on 6 August asking BPC to draft the “Private-Sector Refined Fuel Import, Storage, Transportation, Distribution and Marketing Policy, 2026”.
Private imports could reshape fuel market
BOGCL proposed importing 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.
Bangladesh’s annual petroleum demand stands at around 68-70 lakh tonnes, meaning the proposed imports alone would account for roughly 37-48% of total demand.
The committee noted that this could place a substantial share of the country’s fuel market under the control of a single company.
At present, BPC meets domestic demand through a combination of crude oil refining at Eastern Refinery and imports of refined petroleum products. It then distributes fuel through its state-controlled network at government-set prices.
The committee noted that BPC has continued to sell fuel at controlled prices even when international procurement costs were high.
During periods of elevated global prices, for example, diesel was sold at Tk115 a litre despite higher procurement costs.
Private importers, by contrast, would largely base their decisions on international prices, exchange rates and commercial returns, according to the report.
The committee warned that companies could stockpile fuel in anticipation of higher prices or scale back imports when international prices rise sharply, potentially creating supply disruptions.
Risk of higher prices and shortages
The report said reduced state control could make it more difficult for the government to manage fuel supplies during periods of crisis.
Private companies controlling significant volumes of the market could potentially create artificial shortages, particularly during disagreements over government policies, it said.
Higher fuel prices could also raise transportation, production and other business costs, eventually pushing up the prices of goods and services and adding to inflationary pressure.
If BPC’s role were significantly reduced, the government could also lose some of its ability to respond quickly to emergencies using existing fuel stocks, import contracts, vessels, depots and its nationwide distribution network, the committee said.
The report further warned that private operators might concentrate on more profitable markets such as Dhaka, Chattogram, major cities and industrial areas while reducing supplies to remote regions where transportation costs are higher.
Revenue and state investment concerns
A large shift of fuel imports towards private companies could reduce BPC’s business volume and, consequently, government revenue, the committee said.
Over the past five fiscal years, the government received around Tk71,871 crore in revenue through BPC, averaging about Tk13,587 crore a year.
The committee also questioned whether major public investments made to expand and modernise the country’s fuel infrastructure would generate their intended benefits if private imports were opened on a large scale.
These investments include the nearly Tk31,000 crore Eastern Refinery-2 project, the Chattogram-Dhaka fuel pipeline, the Single Point Mooring project linking Moheshkhali with Patenga, and projects aimed at increasing national fuel storage capacity to 90 days, along with eight other ongoing projects.
Quality control, market dominance concerns
The committee also warned that allowing multiple private importers and supply chains could make fuel-quality monitoring more difficult and increase the risk of adulterated or substandard products.
Large companies with their own terminals, storage facilities, transport systems and marketing networks could gain a dominant position, potentially squeezing out smaller operators, the report said.
Over time, a small number of firms could form market syndicates and gain the ability to influence supplies and prices, it added.
The committee, however, did not oppose private investment in the energy sector altogether. It said private companies could be allowed to invest in refineries, storage facilities and pipelines and import crude oil.
It also questioned the broader implications of allowing a single company to import refined fuel, saying such a move could set a precedent for other firms and raise questions over how many companies should ultimately be permitted to enter the market and what share of the fuel sector should be opened.
