A move is underway to sign a 15-year deal with India to annually import 250,000 tonnes to 400,000 tonnes of diesel from the neighbouring country through a cross-border pipeline.
After a long discussion between Dhaka and New Delhi, the Bangladesh government has finally decided to sign the contract with India to import petroleum, according to official sources.
They said the Cabinet Economic Affairs Committee approved a proposal in principle in this regard on August 23.
The whole consignment of petroleum will come through a cross-border pipeline from India`s Numaligarh refinery, located in Gloaghat in north-eastern Indian state of Assam, while Bangladesh will receive it at Parbatipur petroleum fuel depot in north-western district of Dinajpur.
To facilitate the import, both the neighbours have to build a 130-km cross-border pipeline, named as `Indo-Bangla Friendship Pipeline`, of which a 125-km one is to be laid in Bangladesh while only 5-km in India.
Official sources said though most part of the proposed pipeline is to be laid in Bangladesh part, Indian government will provide about Rs 303 crore as a grant to build the pipeline project in Bangladesh portion.
However, Bangladesh will build and operate the pipeline in its part while India will build and operate the pipeline in its portion.
While promising the grant for the pipeline, the officials said New Delhi tagged a pre-condition that Dhaka has to first sign a `Sales & Purchase Agreement (SPA) to receive the grant.
In compliance with the New Delhi`s condition, the Cabinet Economic Affairs Committee, the highest policymaking body in making economic decision, especially any big purchase without tender, approved a proposal of the Energy Division to sign the SPA.
Bangladesh Petroleum Corporation (BPC) officials said once they received the copy of the cabinet body`s approval, they will move to sign the SPA.
"We hope, the SPA will be signed within a month or two and then the initiative for the construction of pipeline will be taken. It`ll take at least two years to complete the construction," a top official of the BPC told UNB requesting anonymity as he is not authorised to speak on the issue.
An official document obtained by UNB revealed that in the SPA, the `premium` or transportation cost of the petroleum was fixed at $5.5 per barrel of diesel and the price of petroleum will be fixed on the basis of price on the international oil market. Bangladesh now imports diesel with a premium of $4.4 per barrel.
The documents also reveal that Bangladesh will annually import 250,000 metric tonnes in the first three years, 300,000 mt annually in the 4th to 6th years, 350,000 mt annually in the 7th to 10th years and 400,000 mt annually from the 11th to 15th years.