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Tk 23,000cr ERL-2 project for Ctg gets go-ahead


Published : 05 Feb 2023 10:32 PM

The long-standing hurdle in the financing of the second unit project of Eastern Refinery Limited-2 in Chattogram has been cleared.  A green signal has been received for the exemption of government share of the project cost.  

The ERL-2 new unit will have twice the refining capacity of the existing unit.  As a result, if the project is implemented, a new milestone will be added to the country's energy security.

 It is known that the finance department has agreed to give 16 thousand 142 crore taka of the government (GOB) portion of this project as a loan to Bangladesh Petroleum Corporation (BPC). 

 The remaining 6 thousand 916 crores 92 lakhs 93 thousand taka will have to meet the project cost from BPC's own financing.  The five-year project will end in June 2027.  However, BPC will have to pay 16 thousand 142 crores takas as interest in 20 years as 5 percent for the loan.

 Meanwhile, France's Technip has been working on proposals for more than four years to be appointed as an EPC (Engineering, Procurement and Construction) contractor, but they withdrew from the project at the last minute.  For this reason, the government has decided to do the new project through open international tender.

 The people concerned said that the current plant of Eastern Refinery has expired for about 55 years.  After all these years, the refinery is still in full swing.  This unit was built by Technip.  For this reason, BPC wanted to give the construction of the second unit to Technip.  But as the French institution was broken up and transformed into a separate institution, they said they were unable to work.  As a result, the government is now going to a new open international tender.

  According to ERL sources, France's Technip had submitted a proposal for the EPC work.  But in late 2021, Technip informed them of their inability.  Now the project will be implemented through open tender.

 Even though the present refinery is 55 years old, through institutional capacity we have refined more than the maximum target of 15 lakh metric tonnes in FY 2020-22.  Although a milestone has been achieved through this, we are able to meet only around 25 percent of the domestic energy demand.  ERL-2 with an annual refining capacity of 30 lakh metric tons is being built to ensure energy security.  We are preparing a project proposal of Tk 23 thousand 59 crores for the project.  Out of this Tk 16 thousand 142 crores GOB (There was a complication with financing). Now that complication is over. Finance department has decided to give this amount as loan to BPC. If petroleum products can be produced by refining crude oil in the ERL-2 project, it will save about $15 per barrel compared to imports.

 Bangladesh's only state-owned petroleum refinery was established in 1966 in Guptakhal area of the city.  Commercial production began at the refinery on 7 May 1968.  BPC has taken up the project of new unit of 30 lakh metric tons capacity within the existing establishment of Eastern Refinery to increase energy capacity and safety.  Initially, the project cost was estimated at Tk 13.5 thousand crore, but later it was revised to Tk 16 thousand 739 crore.  It was later revised further and the cost is more than 23 thousand crore rupees.

  Engineers India Limited (EIL), an Indian company, was appointed as Project Management Consultant (PMC).  On April 19, 2016, BPC signed an agreement with the Indian consulting firm.  The agreement was signed in the presence of Nasrul Hamid Bipur, State Minister of the Ministry of Power, Energy and Mineral Resources.