The government is moving to open up Bangladesh’s petroleum market to private companies, allowing them to import, distribute and market fuel alongside the state-owned Bangladesh Petroleum Corporation (BPC).

The policy shift is aimed at ensuring an uninterrupted supply of petroleum products, particularly during periods of crisis, while increasing private investment and strengthening the country’s fuel-storage and distribution infrastructure.

Sources said the government has already assigned the BPC to formulate a policy framework under which private companies would be allowed to import petroleum products and subsequently distribute and sell them at the retail level.

“I think there should be a policy to allow the private sector to engage in the petroleum business on a limited scale, not exceeding 30 per cent,” a senior official of the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) told media on Thursday.

The official said the country’s overall fuel-storage capacity could increase significantly if private companies are allowed to participate in the sector, while their existing infrastructure and investments could also be utilised more effectively.

At present, the BPC imports the bulk of Bangladesh’s petroleum requirements, including both crude and refined products such as diesel, furnace oil, jet fuel and octane.

Several privately owned companies, including Super Petrochemical PLC, Petromax Refinery PLC and Acqua Refinery Ltd, use locally sourced and imported condensate and naphtha to produce diesel, petrol and octane.

However, these private refineries do not have permission to sell their petroleum products directly to consumers at the retail level. Instead, they sell their output to the BPC.

Some privately owned furnace-oil-fired power plants also independently import furnace oil for electricity generation.

Under the existing system, the BPC effectively controls the distribution and marketing of refined petroleum products to petrol pumps and other retail outlets across the country.

Critics have long argued that the BPC’s dominance in the petroleum sector has contributed to fuel theft and pilferage, as well as alleged contamination of petroleum products by unscrupulous employees.

They believe greater private-sector participation could end the BPC’s monopoly and create a more transparent and competitive fuel market, while strengthening national energy security and ensuring a more resilient supply chain.

Market insiders have also suggested that the Bangladesh Energy Regulatory Commission (BERC), rather than the BPC, should be given responsibility for determining petroleum prices under an automated fuel-pricing mechanism.

The private sector already plays a dominant role in Bangladesh’s liquefied petroleum gas (LPG) market. Private companies reportedly meet around 98 per cent of the country’s LPG demand, importing approximately 1.7 million tonnes annually.

As a result, a large section of the population obtains cooking and automotive fuel without direct government involvement in either financing or infrastructure, according to industry insiders.

Energy expert Professor M Tamim said the government could consider opening up the petroleum sector, provided there is strong regulatory oversight.

“But there should be strong monitoring to ensure that common people benefit from market liberalisation,” said Tamim, who is also Vice-Chancellor of Independent University, Bangladesh (IUB).

He said Bangladesh could follow neighbouring India’s model, where both public- and private-sector companies are involved in petroleum imports, distribution and retail sales.

According to sources, Bangladesh currently imports around 7.5 million tonnes of petroleum products a year, including crude and refined oil.

Of the total imports, around 5 million tonnes are diesel, 1.5 million tonnes are crude oil, while the remainder comprises furnace oil, jet fuel and octane.

At least three companies, including Bashundhara Group, have already expressed interest in partnering with the government and expanding their involvement in Bangladesh’s petroleum sector, officials of the Energy Ministry said.

Source: The Financial Express