Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
The governments of Bangladesh and India are expected to unveil the India-Bangladesh Friendship Pipeline project work today (Tuesday).
Prime Minister Sheikh Hasina and her Indian counterpart Narendra Modi will jointly inaugurate it through a video-conference, said a senior official of the Ministry of Power, Energy and Mineral Resources (MoPEMR).
This pipeline will boost up the country's energy security further, he added.
Bangladesh will import diesel from Numaligarh Refinery Ltd (NRL) in India's Assam to northern region's Parbatipur oil storage tank through the pipeline.
Total length of the friendship pipeline will be 130 kilometre (km), of which 125 km will be constructed inside Bangladesh and 5.0 km inside India.
Currently diesel is brought to Parbatipur with rail wagons from Doulatpur oil depot in Khulna. Before that diesel is brought to Doulatpur through coastal tanks from Chittagong, after it is imported from international market through cargoes.
The state-run Bangladesh Petroleum Corporation (BPC) will purchase this diesel from NRL for 15 years at a premium rate of US$ 5.50 per barrel to Mean of Platts Arab Gulf (MoPAG) diesel assessment on cost and freight (CFR) basis.
So, the diesel price will be above $ 5.50 per barrel from international price, according to a senior BPC official.
This premium rate is, however, almost double than the existing premium rate for diesel, he said.
BPC has been importing diesel from the international market at a premium rate of around $ 3.30 per barrel to MoPAG diesel assessments on CFR basis.
The cost of fuel transportation and the loss from evaporation are covered from the premium.
Although the premium rate is higher, diesel import through the pipeline will save BPC's time, expenditure and hassle on account of transportation of diesel from Chittagong Port to Parbatipur, said the MoPEMR official.
Initially, the pipeline is planned to carry around 250,000 tonnes of diesel per year to Bangladesh during the first three years. It will be gradually increased to 400,000 tonnes per year during the last five years.
Bangladesh might import diesel beyond the already-agreed 15 years following mutual decision, the official added.
The cross-border pipeline will go through Panchagar, Nilphamari and Dinajpur to reach Parbatipur oil storage.
Indian diesel will be consumed by clients in the northern region, once the pipeline is constructed. Diesel demand is around 1.10 million tonnes in the country's 16 northern districts.
Separately, BPC has been regularly importing around 2,200 tonnes of diesel from Numaligarh refinery every month through railway since March 2016.
BPC has imported around 54,700 tonnes of diesel since July 2018, and is likely to import 50,000 tonnes more diesel by December 2018.
Bangladesh earlier imported diesel from India only for a brief period and in a small quantity of 3,500 tonnes from the state-run Bharat Petroleum Corporation Ltd (BPCL) in 2007.
BPC also imported around 400,000 tonnes of diesel from Indian Oil Company Ltd during 2005-06, BPC officials said.