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The state-run Bangladesh Petroleum Corporation, or BPC, is in talks with global oil suppliers to ensure supply of cleaner fuel from next July.
Bangladesh will be importing 0.005 per cent sulfur gasoil, or diesel, from July 2020, instead of 0.05 per cent sulfur gasoil, to ensure a cleaner environment.
The BPC is expected to import an estimated 1.75 million tonnes of 0.005 per cent sulfur gasoil, or ultra-low sulfur gasoil, during the July-December period.
Last week, the cabinet committee on economic affairs gave the go-ahead to initiate imports of cleaner sulfur gasoil, BPC chairman Md Shamsur Rahman told the FE.
The BPC as the only importer brings in 4.0 million tonnes of gasoil annually. The government has restricted import of this fuel by the private sector.
The BPC will have to count an extra Tk 443.60 million, or $5.28 million, to import sulfur gasoil with an additional premium of $0.40 per barrel.
"We are going to import the cleaner fuel to save the environment from pollution, although the cost will be higher," said Mr Rahman.
The BPC has initiated to import lower sulfur marine fuel, or 180 CST high sulfur fuel oil (HSFO) with 0.5 per cent sulfur instead of 3.5 per cent from March.
The fuel will be imported as per the International Maritime Organisation guideline, the BPC chief said.
The Environment and forests ministry has long been instructing the state corporation to import cleaner gasoil for safer environment.
Currently, the BPC has been importing 0.05 per cent sulfur gasoil under both term
deals and open tendering in line with a government decision.
The state entity is importing 0.05 per cent sulfur gasoil from Unipec Singapore Pte Ltd under open tendering system on a CFR basis at Chattogram port.
It also imports 180 CST HSFO with 3.5 per cent sulfur from Vitol Asia Singapore Pte Ltd under open tendering system on a CFR basis at Chattogram port.
Other term suppliers to the BPC include Kuwait Petroleum Corporation (KPC), PETCO Trading Labuan Company Ltd, Emirates National Oil Company (Singapore) Pte Ltd, Petrochina (Singapore) Pte Ltd, PT Bumi Siak Pusako, Unipec Singapore Pte Ltd, PTT International Trading Pte and Numaligarh Refinery Ltd.
The KPC, however, is the lead supplier of refined oil for Bangladesh.
The BPC last changed sulfur content of gasoil for import in January 2015, when it started importing 0.05 per cent sulfur gasoil instead of 0.20 per cent.
All suppliers excepting the KPC had then started supplying 0.05 per cent sulfur gasoil to the BPC.
The KPC, however, started supplying 0.05 per cent sulfur gasoil from January 2016, said a senior energy ministry official.