Bashundhara Group has said it would go ahead with a US$700 million investment in the country's first private sector refinery despite objection by the state-owned Bangladesh Petroleum Corporation (BPC).
The largest private sector project in the country would be built at 112 acres of land Bashundhara acquired in the south bank of the Karnaphuli river and it will have the capacity to refine 2.5 million tonnes of crude a year.
"We have conducted a feasibility study of the project and are now in the process of striking a deal with Technip to commission the refinery. The refinery is expected to start operation by 2012," chief coordinator of the project M.Z Arzu said.
France-based Technip is the global leader in refinery technology and commissioning. It built Bangladesh's first state-owned Eastern Refinery Limited (ERL) way back in 1968.
The real-estate-to-paper giant said it has sought permission from the energy ministry submitting all the required documents and study reports needed to set up a refinery in the country.
"If the government approves our project tomorrow, we will start construction process the next day. We have even readied international funds for the project," Arzu said.
He said the group has also roped in top local consultants including former special aide to the chief advisor M Tamim to execute the project in about two years time.
The refinery investment marks the end of two years of wilderness of Tk30 billion conglomerate during which its owner and his family had to leave the country after being targeted by the army-backed caretaker government in its anti-graft drive.
Group chairman Ahmed Akbar Sobhan, his wife and three sons were tried in absentia in a tax evasion case by an anti-graft court, leading to massive slump in its flagship real estate business and suspension of some key projects.
Sobhan and his family came back after the restoration of democracy early this year and have unveiled the group's expansion drive. They have also appealed against the tax evasion case.
Arzu said the group wants to make up lost time by investing in big infrastructure projects including a refinery and a private sea-port.
"During his stay abroad, the chairman also discussed setting up the refinery project with foreign consultants. Now we are just waiting for a positive signal from the government," he said.
But much before the energy ministry's clearance, the BPC, the country's lone state-owned petroleum marketing and distribution agency, has raised some serious objections into the project.
Ordered by the ministry, the BPC last month set up a high-powered committee led by its operation director to assess the Bashundhara refinery project.
The committee has already submitted its report, saying it won't allow the company to sell any of its products in Bangladesh where it enjoys total monopoly.
"We have said that Bashundhara has to export its entire production overseas. They can sell the products to us provided need them," a BPC official who is also member of the committee said.
"They can import crude oil, refine them in their refinery, but won't be able to sell their refined oil in the country. They will also have to set up the refinery ensuring all international standards," he said.
The BPC has also asked Bashundhara to assess environmental impact of the project and conduct a final techno-feasibility study before its operation.
"We have said that we would only clear the project when it completes all the required techno-feasibility studies," he added.
Bashundhara project director Arzu said the company would abide by "all the norms" needed to set up the refinery and was ready to sell all its production overseas if the BPC does not need its refined oil.
"We can sell our entire 2.5 million tonnes production abroad. We are not in the business of competing with BPC or any other state agencies," Arzu said.
Experts have said Bashundhara was trying to capitalise on inadequate capacity at the country's lone state-owned ERL, also situated in Chittagong.
Presently ERL can refine 1.2 million tonnes of crude a year, which is around 30 per cent of the country's total demand. BPC buys the rest of the amount mostly from the gulf countries.
The ERL recently unveiled a plan to raise its production to 4.5 million tonnes, enough to meet the country's entire petroleum demand. A Pakistani company is conducting a feasibility study for the expansion project.
Although Islamic Development Bank has said it would finance part of the project, there is still a big question mark over how the ERL is going to raise $1.0 billion needed to finance the expansion.
by- Mushir Ahmed and Jasim Uddin Haroon
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