The Bangladesh Petroleum Corporation is glutted with furnace oil due to its consumption in the power plants falling far below than the predicted.
The oil glut left the BPC鈥檚 furnace oil storage capacity almost filled up, threatening to shut down the production at the Eastern Refinery Limited, the state-owned oil refinery.
The ERL produces around 1,100 tonnes of furnace oil daily, supplying it to the BPC to be used in the oil-based power plants.
Out of the total storage capacity of about 1.8 lakh tonnes, the BPC has in store nearly 1.3 lakh tonnes of furnace oil. Almost filled-to-the-capacity also means that the BPC cannot import oil now when its price has reached the lowest in the past four years.
鈥楾he situation is likely to change soon as the PDB is making arrangements to take away some of the oil,鈥� said AKM Azadur Rahman, director, operations, BPC.
The Bangladesh Power Development Board in past September gave a requirement of 12.39 lakh tonnes of furnace oil to operate its oil-based power plants in 2025. The BPC is responsible for supplying the oil between January and December every year.聽聽聽聽聽
For the month of April, the oil requirement was over 1.35 lakh tonnes.
The BPDB updated its furnace oil requirement by increasing the demand drastically in March, telling the BPC that the BPDB would need 35.51 lakh tonnes by September.
The new requirement put the average monthly demand for furnace oil to be used in oil-based power plants at over 5 lakh tonnes.
In the first 20 days of April, the BPDB consumed 32,783 tonnes of furnace oil, leading to the glut.
The BPDB has meanwhile come up with a plan to relieve 25,000 tonnes from the stock soon by supplying the oil to 10 oil-based power plants.
Oil-based power plants account for 5,741MW of the installed generation capacity, 21 per cent of the overall installed power generation capacity of 27,645MW.
The interim government, after assuming power after the fall of the past Awami League regime, adopted a plan to cut the furnace oil use to reduce power sector spending.
But the March oil requirement placed by the BPDB indicated that the government moved away from its position, apparently because of its inability to supply energy to gas-based power plants according to the plan.
The gas-based power generation remains at about 6,000MW against the generation capacity of about 12,000MW. The coal generation remained about 4,000MW against the generation capacity of over 5,600MW. The dollar crisis had limited the use of the coal- and gas-based聽 power plants.
On occasions when power demand rose to 15,000MW, the BPDB increased generation from oil-based power plants, up to 4,000MW against the capacity of over 5,700MW.
The month of April, the hottest time of year, this year so far remained rather less warm, particularly compared to the聽past year when day temperatures frequently exceeded 40C in the worst-ever heatwave.
Last April, the furnace oil consumption was about 1 lakh tonnes, about three times the consumption so far this year.
Intermittent spells of thunderstorm is preventing day temperatures from going up, giving people an unexpected relief from a much-anticipated April heat.
The BPC鈥檚 storage capacity remained far inadequate compared to the oil demand because of the past AL government鈥檚 encouragement of oil import by the private sector.
Private power generators imported 28.47 lakh tonnes of furnace oil in the financial year of 2022-23 against the government import of 8.12 lakh tonnes.
The dollar crisis curtailed oil import in 2023-24. Private power producers imported 10.89 lakh tonnes in the last financial year against the government import of 8.59 lakh tons.
The ERL produced 3.89 lakh tonnes of furnace oil in 2022-23 and 3.50聽lakh tonnes in the past financial year.
The oil glut is hindering oil import at a time when the crude oil price is hovering at four years low.
According to the Trading Economics, each Bbl of crude oil cost 63.12 USD on Monday. The last time the oil price reached the current level was in August, 2021.
