Chattogram-based business conglomerate S Alam Group has been dropped from the joint venture project of Eastern Refinery Limited (ERL) for refining fuel oil.
The interim government took a policy decision not to enter into an agreement with S Alam Group involved in a series of financial scams.
Eastern Refinery Limited under Bangladesh Petroleum Corporation (BPC) can refine 1.5 million tonnes of fuel oil annually.
The ousted Awami League government planned to create another unit of ERL in a joint venture with S Alam to refine 3 million tonnes of fuel oil.
The project named “Installation of ERL-2” was taken up in 2012 to save around $240 million annually, according to BPC officials.
Some officials from BPC and ERL said that the S Alam Group was dropped from the refinery project upon instructions of the former Prime Minister’s Office.
The group sought to take 51 per cent ownership in the name of investment while the decision was pending with a lack of consensus from both sides, said officials.
BPC proposed 60 per cent ownership on the side of the state-owned company while the draft agreement was sent to the Law Ministry in the last week of July for vetting.
The Energy and Mineral Resources Division also didn’t agree on the construction of the refinery in partnership with S Alam Group. Energy and Mineral Resources Division Secretary Nurul Alam told the media that the new fuel oil refinery construction project will be implemented with its own financing.
“For its implementation, the contractor will be appointed by inviting open tenders. The new project is going to have a unit with 3 million tonne capacity,” he said.
The decision to implement the ERL-2 project has been taken on the basis of a joint partnership agreement (Public-Private Partnership) between ERL and S Alam Group, according to a letter sent to the BPC on February 5.
BPC, ERL and S Alam Group will agree on all issues before the MoU between the two companies is signed, it said.
Once the agreement is finalised, ERL and S Alam Group will form a Special Purpose Vehicle (SVP) company. The letter said that according to the proposal, S Alam Group will construct another refinery having a capacity of refining 30 to 50 million tonnes of oil in the existing refinery area of ERL.
BPC formed a committee on February 14 to scrutinise the draft MoU proposed by the S Alam Group and submit the final report.
“The contract with S Alam Group was unfair. The Interim Government made a good decision by canceling it. It will be more cost-effective if self-financed. The refinery should be constructed soon,” the letter said.
The present ERL was built by France’s technology. The government gave approval in-principle for the new refinery through them. The implementation of the ERL-2 project was estimated to cost about Tk197.69 billion.
bd-pratidin/GR
