Local lub blenders for raising duty on finished lubricants

The Bangladesh Lub Blenders Association (BLBA) has requested the government to raise import duties on finished lubricants and enforce stricter valuation mechanisms in the upcoming FY27 budget, aiming to shield the domestic industry from misdeclaration and uneven competition.

In a proposal submitted to the Ministry of Finance, the association sought policy support to protect local blending capacity, which it says is increasingly under pressure from a surge in imports of finished oils.

Industry insiders say the BLBA has suggested restoring the customs duty on finished lubricating oil, including mineral, synthetic, and semi-synthetic variants, to 25 per cent from the existing 15 per cent.

The duty was reduced from 25 per cent in FY17, a move the association claims triggered a sharp rise in imports, undermining domestic producers.

According to the BLBA, Bangladesh now has 23 blending plants with a combined annual capacity exceeding 0.20 million tonnes, significantly higher than the estimated domestic demand of around 0.15 million tonnes.

The association argued that without tariff protection, local manufacturers would struggle to utilise their installed capacity.

The proposal also flagged widespread "misdeclaration" in import values due to the absence of internationally accepted price benchmarks for finished lubricants.

To address the issue, the BLBA suggested setting a minimum assessment value based on import prices declared by state-owned companies, such as Padma, Meghna, and Jamuna, alongside globally recognised compliance brands.

For raw materials, particularly lube base oil, the association recommended adopting international pricing references like ICIS and Platts to ensure transparent and uniform customs valuation, similar to the existing mechanism for fuel oil.

The BLBA further highlighted anomalies in the import valuation of liquid paraffin, noting that the current government-fixed minimum value of $1,300 per tonne is significantly below the prevailing international prices, which range between $1,600 and $3,000.

Such under-valuation, it warned, is encouraging the influx of low-quality paraffin and facilitating misdeclaration of base oil imports, ultimately leading to adulterated lubricant production.

To address the issue, the association proposed raising the minimum import value of liquid paraffin to $1,800 per tonne.

Stakeholders said the lubricant sector had emerged as a growing segment of the country's industrial landscape, attracting both local and foreign investments.

An official said the proposal is under review as the government finalises preparations for the next national budget.

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